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A new Federal Reserve survey of 517 U.S. businesses reveals that small and financially constrained companies are facing mounting pressure — and are being forced to raise prices to cope. The findings paint a picture of an economy where large firms are weathering the storm, but smaller businesses are being squeezed from every direction.
The Q3 2026 CFO Survey, a collaboration of Duke University’s Fuqua School of Business and the Federal Reserve Banks of Richmond and Atlanta, was fielded from August 17 to September 4 — before the Fed raised interest rates by 25 basis points on September 16 . That timing matters: it means the full impact of higher borrowing costs has not yet been captured. The pressure on small businesses is likely to intensify, not ease.
Prices Are Rising — And Businesses Expect Them to Keep Rising
The survey’s most immediate finding is that businesses are planning to pass higher costs on to consumers at an accelerating pace.
Average price increase expectations for 2026 rose to 5.3%, up from 4.6% in Q2 and 3.6% at the start of the year. Next year’s expectations climbed to 4.5% . For context, that is more than double the Fed’s 2% inflation target.
The reasons vary — tariffs, supply chain costs, wage pressures, and energy prices all play a role — but the result is the same: businesses are expecting to charge more, and consumers will be paying more.
The Shift in What’s Keeping CFOs Up at Night
For the past several years, inflation has been the dominant concern for business financial officers. That has changed.
“Monetary policy” has now replaced inflation as the top concern, with about 20% of CFOs citing it as their primary worry — up from less than 15% in the previous quarter .
This shift reflects a simple reality: it is not the cost of goods that is squeezing businesses anymore. It is the cost of money itself. When the Fed raises rates, the cost of servicing existing debt rises, the cost of new borrowing increases, and the availability of credit tightens.
For large firms with strong balance sheets and established banking relationships, this is manageable. For small firms, it can be existential.
The Two-Tiered Economy: Large Firms Thrive, Small Firms Struggle
The survey revealed a clear divide between large and small businesses.
Overall optimism among large firms remained strong. But that optimism was offset by declining outlooks for small and capital-constrained businesses . The headline numbers look stable — but underneath, a two-tiered economy is emerging.
The data tells the story:
- Revenue expectations for small firms are lower than for large firms. Large firms are projecting growth; small firms are projecting survival .
- Employment plans: Among the 12% of firms that report not filling open positions or laying off workers, over half cite financial constraints as the cause for shrinking their workforce. Businesses are not cutting jobs because demand is weak — they are cutting jobs because they cannot afford to keep them .
- Capital investment: A smaller share of firms plan to make capital investments over the next six months compared to two quarters ago. The growing reason is not lack of need, but unfavorable financing and increased liquidity needs .
Sonya Waddell, vice president and economist at the Richmond Fed, summarized the situation: “Where there are challenges, they are most pronounced for small or financially constrained firms” .
The Human Cost: What This Means for Entrepreneurs
Behind the numbers are real people making hard decisions.
A restaurant owner in Atlanta who planned to open a second location is now holding off — the loan terms her bank offered after the rate hike were 1.5 percentage points higher than expected, and her margin cannot absorb the difference.
A construction contractor in Phoenix who bid on a major project last month is now worried about cash flow. His supplier raised prices, and his line of credit is more expensive. He is not sure he can afford to take on the work.
A graphic designer in Detroit who launched her business in 2024 with a grant from a local nonprofit is now looking for a second job to cover her personal expenses. Her small business is growing — but not fast enough to keep up with rising costs.
These are the stories behind the survey data. And they are playing out in every city and town across America.
The Barriers Are Worse for Some
For entrepreneurs in communities that have historically been underserved by traditional banks, the credit squeeze is more acute.
Black-owned businesses make up roughly 3% of all U.S. employer firms but receive a fraction of a percent of venture capital funding. Latino-owned businesses face similar gaps. When credit tightens across the board, the entrepreneurs who were already on the margins feel it first — and they have fewer reserves to fall back on.
Community Development Financial Institutions (CDFIs) exist precisely for this reason. These Treasury-certified lenders are mandated to serve underserved communities and offer loans up to $250,000 with mission-driven terms. But CDFIs also face higher costs when the Fed raises rates, which limits their capacity to lend .
What Entrepreneurs Can Do Now
1. Build a cash buffer. With financing conditions tightening, reserves covering 3–6 months of expenses are more important than ever.
2. Lock in rates on existing credit lines if your lender allows it — before the next rate hike hits.
3. Consider CDFI lending. If traditional bank financing is out of reach, CDFIs specialize in serving entrepreneurs who face barriers to capital. HOPE Credit Union, for example, lends up to $250,000 on a rolling basis.
4. Revisit your pricing strategy. If your costs are rising, you may need to adjust prices to maintain margins. Communicate transparently with customers — most will understand.
5. Diversify revenue streams. Businesses with multiple income sources are more resilient when one source slows down.
6. Invest in skills, not just equipment. In a tight financing environment, human capital is often more valuable than physical capital.
The Bigger Picture: A Two-Tiered Economy
The Fed’s rate hike last week was designed to fight inflation. But it has also widened the gap between those who can weather higher borrowing costs and those who cannot.
Large firms with strong balance sheets are fine. Small firms operating on thin margins are not. And the entrepreneurs who have historically been shut out of capital markets — Black, Latino, immigrant, and working-class founders — are being squeezed hardest.
The Fed’s survey was conducted before the rate hike. The full impact is still coming. And for small business owners across America, the question is not whether the squeeze will get tighter. It is how long they can hold on.
Sources
Duke’s Fuqua School of Business: “CFO Outlook: Steady Overall but Weaker for Small and Financially Constrained Firms” (September 21, 2026)
The Globe and Mail (Reuters): “Among company finance chiefs, rising rates are now a top concern, Fed survey finds” (September 22, 2026)
Federal Reserve Bank of Richmond: “CFO Outlook Holds Up Despite Continued Tariff Concerns, Uncertainty” (March 25, 2026)
Federal Reserve Bank of Richmond: “CFO Survey Data & Results” (March 25, 2026)
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