The backbone of the U.S. economy, the American small business, may be breaking beyond repair without serious intervention, a new study from private digital lender Biz2Credit shows.

The study’s data was drawn from more than 100,000 funding applications submitted to Biz2Credit between January 2022 and December 2024, and shows a sharp drop in small business earnings towards the end of 2024, a trend which the lender sees continuing until 2025.

The study underscores concerns about the economy after four years of so-called Bidenomics, or President Biden’s policies that involve taxes and regulations on the business community while offering tax incentives for some targeted industries that align with his progressive agenda Despite strong GDP growth figures and low unemployment, issues such as inflation and regulatory costs have hit certain segments of the economy harder than others.

INFLATION INCREASED 2.9% IN DECEMBER, IN LINE WITH EXPECTATIONS

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“Small business owners had a rollercoaster ride in 2024. Earnings grew through July and declined every month through December,” said Rohit Arora, CEO and co-founder of Biz2Credit. “Median monthly earnings dropped nearly $68,000 compared to 2023 and were also lower than 2022.”

The reason for the decline, according to Arora, is that small businesses don’t have the scale to spread costs across a large balance sheet and are the most affected by inflation, which, while abating, has led to high prices for goods they have had. t.

The incoming Trump administration has pledged to ease regulations and taxes on small businesses to restore growth lost during the Biden years.

“Trump was elected on his promise to fix the economy, and he says that’s going to be a priority from Day 1,” Arora said. “Based on our data from the later months of 2024, the start of 2025 could be difficult for small businesses.”

SMALL BUSINESS OPTIMISM JUMPS TO SIX-YEAR HIGH AFTER TRUMP WINS

President Donald Trump raises his fist after speaking in the East Room of the White House, early Wednesday, Nov. 4, 2020, in Washington, as Vice President Mike Pence and first lady Melania Trump look on. (AP Photo/Evan Vucci)

The survey, for example, shows that small businesses suffered a 43% drop in profits in 2024. Average monthly revenue for businesses surveyed in the first 11 months of 2024 was $86,809, compared to $150,000 in 2023, the worst annual average since 2020. One of the biggest problems for small businesses has been the persistence of high prices Business-related costs have risen dramatically, with average monthly expenses at $664,525 compared to $364,292 a year earlier.

While the inflation rate has been trending lower since June 2022, when it hit a staggering 9.1% (Wednesday’s CPI report showed inflation rose to 2, 9% in December, up slightly from the previous month), overall small business costs in the form of rent, insurance and labor remain high, and some are rising.

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On a bright note, the National Federation of Independent Business (NFIB) released its latest Small Business Optimism Index on Tuesday, showing that optimism on Main Street rose 3.4 points to 105.1 in december It marked the highest reading since October 2018 as small business owners hope economic conditions will improve under Trump.