New York Fed EHIs Reveal Small Enterprise Struggles

Will Aarons and Asani Sarkar

The New York Fed’s Financial Heterogeneity Indicators (EHIs) intention to check macroeconomic outcomes skilled by varied teams of individuals and companies. We lately added a collection of indicators describing the efficiency of small companies to the EHIs—each for the area (outlined, for the aim of this examine, as New York, New Jersey, and Connecticut) and nationally. Small companies are crucial to employment era as they accounted for virtually 63 % of recent personal sector jobs since 2005 and employed virtually 46 % of all U.S. employees in 2025. Thus, understanding financial tendencies and impacts for small companies is essential for designing efficient financial coverage and aligns with the New York Fed’s mission to help the regional financial system. On this publish, we spotlight some facets of small enterprise profitability, revenues, employment, and indebtedness since 2019 for corporations of totally different sizes.  

What’s New and Related About Small Enterprise Indicators? 

The small enterprise EHIs leverage information from the Small Enterprise Credit score Survey (SBCS), an annual survey of enterprise house owners with fewer than 500 staff by the twelve Federal Reserve Banks. We deal with employer corporations—that is, corporations with no less than one worker apart from the proprietor. Along with efficiency indicators for small companies nationally (additionally supplied within the SBCS 2025 report), we present how these indicators range by agency measurement. Specifically, we discover that corporations with fewer than ten staff (about two-thirds of all corporations in our pattern, on common) face extra difficulties in responding to financial and technological challenges. We additional report efficiency indicators for small companies within the area and present how they’ve lagged relative to their nationwide counterparts.   

Profitability, Revenues, and Prices 

Not surprisingly, small enterprise profitability fell sharply in the course of the COVID-19 pandemic in 2020 as 46 share factors extra corporations reported they have been operating losses slightly than making a revenue. By the top of 2023, profitability had recovered partially, with 11 share factors extra corporations reporting income as a substitute of losses. Smaller shares of corporations within the area have been worthwhile than corporations nationally, with simply 6 share factors extra corporations reporting income as a substitute of losses on the finish of 2023.

The restoration in income development following the pandemic has been slower and fewer sustained than the restoration in income, with the online share of corporations reporting increased revenues remaining nicely under the extent in 2019. That is significantly so for corporations within the area, with a bigger share of those corporations reporting decrease slightly than increased revenues in yearly since 2020. Corporations with fewer than ten staff have struggled probably the most, and, in 2024, extra respondents from these corporations reported decrease slightly than increased revenues for the primary time for the reason that pandemic (see chart under). Throughout measurement teams, decrease shares of corporations raised costs whereas increased shares reported weaker gross sales in 2024, though these modifications have been small. However, income expectations for 2025 remained secure for corporations nationally, however bigger shares of corporations within the area anticipated revenues to say no relative to 2024.

Restoration in Income Progress Because the Pandemic Has Been Sluggish

According to declining inflation, fewer corporations within the nationwide pattern reported increased enter and wage prices as a monetary problem in recent times. However, bucking the nationwide development, regional corporations with fewer than ten staff reported increased enter and wage prices as a monetary problem in 2024. 

Employment

Much like income development, employment development exhibited a gradual however weak restoration from the pandemic, particularly for smaller corporations. As with Tri-State corporations on the whole, small companies within the area have struggled much more than corporations nationally to generate employment for the reason that pandemic. Certainly, annually since 2020, except for 2023, extra corporations within the area reported adverse employment development than constructive employment development. These with fewer than ten staff had the least employment development (see chart under), and a better share of those corporations downsized and had hiring difficulties in 2024 than in 2023. Even amongst corporations with ten or extra staff, decrease shares anticipated increased employment in 2025 nationally and within the area, relative to the earlier yr.

Progress in Employment Has Been Weak for Smaller Corporations

Indebtedness 

Within the nationwide pattern, debt (outlined because the mid-point of the vary reported by respondents) per worker declined in 2024, particularly for corporations with fewer than ten staff. Indebtedness might lower both because of decrease demand for credit score or constrained provide of credit score. According to a provide impact, increased shares of corporations acquired lower than the complete quantity of credit score that they utilized for whereas a decrease share of corporations reported that they didn’t apply as a result of they didn’t want funds. Opposite to nationwide tendencies, debt per worker for regional corporations elevated in 2024.

Know-how and Provide Chain

In 2024, extra corporations (particularly these with fewer than ten staff) reported difficulties with using know-how comparable to cybersecurity, e‑commerce, and social media. Within the area, extra corporations of all sizes reported difficulties with using know-how, mirroring nationwide tendencies. The share of corporations reporting provide chain difficulties has declined considerably since 2021, each for the nationwide and regional samples.

Summing Up

Utilizing annual survey information, we report on nationwide and regional tendencies in small enterprise efficiency from 2019 to 2024. We discover solely partial restoration from the pandemic in profitability, and development in revenues and employment, with worse efficiency for smaller corporations and corporations within the area. These tendencies in employment and income development continued in 2025 for small companies with 1 to 9 staff, as reported by Intuit’s Small Enterprise Index utilizing information for nearly 475,000 corporations that run payroll with QuickBooks. Our findings emphasize the growing fragility of the very smallest corporations when responding to financial and technological challenges.

Asani Sarkar is a monetary analysis advisor within the Federal Reserve Financial institution of New York’s Analysis and Statistics Group.

Will Aarons is a analysis analyst within the Federal Reserve Financial institution of New York’s Analysis and Statistics Group.

 @article{
        AaronsSarkar2026,
        creator={Aarons, Will and Sarkar, Asani},
        title={New York Fed EHIs Reveal Small Enterprise Struggles},
        journal={Liberty Avenue Economics},
        notice={Liberty Avenue Economics Weblog},
        quantity={February 3},
        yr={2026},
        url={https://doi.org/10.59576/lse.20260203b}
    }