The affordability crisis is intensifying pressure on small businesses across the United States, with owners grappling with soaring costs, tariff uncertainties, and strained finances. Many are forced to make difficult decisions like layoffs and price hikes to survive, highlighting the fragility of Main Street enterprises in the current economic climate.
Surging import costs, mounting payroll and healthcare expenses, a shortage of affordable loans, and a stressed-out workforce are converging to create unprecedented challenges for mom-and-pop shops. Doug Scheffel, owner of ETM Manufacturing in Massachusetts, laid off about a quarter of his employees in April as haphazard tariff rollouts dented demand for his company’s machine parts and sheet metal. He described the environment as ‘very uncertain and impossible to plan,’ with everyone ‘hunkering down and building up cash.’ This sentiment echoes across small businesses, which account for the vast majority of US enterprises and nearly half of all employees.
Tariffs under the Trump administration have exacerbated the situation, with average rates on imports reaching 16.8%, the highest since 1935. Bryan Pate, CEO of PT Motion Works in San Diego, cited tariffs as a major headache, noting that a 20% levy on Taiwan—where his bikes are manufactured—has forced him to end contracts with US assembly workers and shift production to Mexico. He plans to raise prices to offset costs but fears eroding demand, stating, ‘It’s been economically painful, and long-term, if tariffs stay where they are, it’s just not going to work.’ The unpredictability of trade policies adds anxiety and wastes valuable time for business owners.
Healthcare costs are another critical burden, with the average cost of single coverage insurance surging by 120% over two decades for companies with fewer than 50 employees. Pate emphasized that this acts as an ‘unfair barrier to hiring,’ putting small businesses at a disadvantage against larger corporations. Similarly, payroll expenses are squeezing margins, forcing owners to rethink staffing and benefits. These rising fixed costs compound the pressure from tariffs, leaving little room for investment or growth.
Access to affordable capital remains a significant hurdle, with many small businesses facing loan rates well above 10%. Khari Parker, co-founder of Connie’s Chicken and Waffles in Baltimore, reported being ‘hit with very, very high rates of 20% to 30%,’ making expansion nearly impossible. While the Small Business Administration has approved over 58,000 loans worth $32 billion since Trump took office, and a record $44.8 billion in guarantees for fiscal 2025, high borrowing costs continue to stifle innovation and job creation for many entrepreneurs.
Labor shortages, intensified by an immigration crackdown, further strain operations. Antonio McMillion, president of MFP Management & Construction in Maryland, noted that immigration raids have made workers nervous, forcing his company to hire more expensive labor and raising project costs by up to 40%. Parker echoed this, saying it’s ‘very hard to find workers’ when small businesses can’t match the competitive pay and benefits of larger firms. This talent crunch undermines productivity and adds to the overall stress on business owners.
Despite these challenges, small business optimism has fluctuated but remains slightly above its 52-year average, with some owners hopeful about future technologies like artificial intelligence. However, the cumulative effect of costs and uncertainties is taking a toll on morale. Pate expressed frustration but praised his employees’ resilience, noting that ‘no one is throwing in the towel.’ This determination is crucial as businesses navigate an era of rapid change and economic headwinds.
Looking ahead, the affordability crisis threatens to reshape the small business landscape, potentially leading to consolidation or closures if conditions don’t improve. Owners are calling for more stable policies and support to level the playing field. As Scheffel put it, ‘Bad stuff happens when they’re not totally focused,’ underscoring how financial worries among employees can impact safety and performance. The outcome will depend on broader economic trends and policy decisions in the coming months.
