TD Economics report shows number of small businesses is climbing
The U.S. economy experienced significant fluctuations throughout 2025, affecting businesses of every size. As we move through 2026, uncertainty remains, with changes in international trade policies and energy prices continuing to create challenges and unexpected obstacles for companies across the country, reported Ksenia Bushmeneva in new research, U.S. Small Businesses Adapt to Shifting Economic Tides.
The TD Financial Preparedness Survey of Small Business Owners indicates that the country's small businesses — those employing fewer than 100 people — may be slowly adapting to these unpredictable economic conditions.
What isn't slowing is U.S. entrepreneurs' sense of optimism. Just like the lean years of the COVID-19 pandemic, small businesses continue to open and expand.
"This optimism is likely rooted in robust business performance," Ksenia said. "In the first quarter of 2026, a slightly larger number of small business owners rated their business performance as average, above average or even excellent relative to the same period last year. This suggests that small enterprises are holding their own in a constantly shifting economic landscape."
New businesses opening, but technology sees a slowdown
Business formation picked up in late 2025, with 230,000 more businesses launched than the year before — a 1.9% increase. Demand for U.S. Small Business Administration (SBA) loans followed suit, with approved applications up 11% and total loan dollars increasing by 20% in fiscal 2025.
New businesses opened in multiple industries, but two sectors stood out: healthcare and social assistance, and professional and technical services. Together, they made up two-thirds of all new businesses created last year, according to the U.S. Bureau of Labor Statistics.
Ksenia noted that most of the growth in healthcare and social assistance-related businesses is tied to the need for services for older Americans.
"The number of Americans over the age of 75 has risen 25% since 2019, driving increased demand for support services," she said. "This growth aligns with the labor market data, with the healthcare sector being responsible for most of last year’s job gains."
Professional and technical services — including legal, accounting, marketing, as well as software, scientific and engineering firms — also added 15% of all new businesses.
At the same time, small business openings in the AI and tech sectors slowed significantly last year compared to 2024. Although AI dominates headlines and business practices, fewer entrepreneurs appear to be seeing opportunities to join the industry.
Small business growth and thriving communities
Similar to the years immediately after the pandemic, 2026 could bring accelerated business openings and expansions across the country. Most recent data on business applications supports this, showing a notable uptick in business applications. A combination of the rising use of AI in small businesses, tax law changes and other conditions could also increase small business owners' appetite to spend on their company and invest in their communities.
Despite the economic uncertainty, small businesses are proving resilient in today's economy, taking advantage of new opportunities while coping with challenges like inflation, rising healthcare costs and availability of workers. The increasing adoption of AI and business-friendly tax policies are setting the stage for addressing some of the current challenges while setting up for growth in the years ahead.
Read more about the state of small businesses in this TD Economics report: U.S. Small Businesses Adapt to Shifting Economic Tides.
Thinking about starting a business?
There are many considerations to starting a business beyond what expertise you have and the type of business. Adopting a growth mindset and being open to learning, adapting and embracing challenges as opportunities for growth will help a new business owner be flexible while confronting the inevitable bumps along the way.
From a financial side, determine the amount of capital needed and explore funding options for your venture (small business loans, grants, investors and personal savings). There are pros and cons to each of these, but all options require business owners to have some investment and accountability.
For more information on how to approach a start-up mindset, read Three Ways to Logistically, Financially and Mentally Prepare to Start Your Own Business.
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