Smallest Firms Power Main Street’s Resilience

Main Street depends on the vitality of its smallest businesses. With the right mix of growth opportunities and the tools to seize them, micro-businesses can blossom into larger firms that employ more workers and provide the goods and services that sustain local economies.

A PYMNTS Intelligence report on small and medium-sized businesses (SMBs), “Main Street SMB Confidence Rises While Cash Flow Strain Lingers,” finds that micro SMBs — the smallest firms in the survey sample — are helping drive renewed confidence across Main Street.

These firms may operate with fewer employees and narrower margins than their mid-sized and larger peers, but their ability to adapt quickly and capture demand has made them central to the overall rebound in optimism.

Defining the Micro SMB Segment

Micro SMBs, in the context of the report, represent the smallest businesses by size and revenue among the 513 U.S. firms surveyed. While they typically struggle more than larger peers with cash-flow strain and late payments, they also represent the most dynamic segment when customer demand improves. In June 2025, these firms registered a significant confidence surge, narrowing some of the resilience gap that has long separated them from bigger competitors.

Overall, optimism across all SMBs is at a record high, with more than 8 in 10 businesses confident in their survival over the next two years. For micro SMBs, three-quarters now say they expect to endure — a marked improvement since the spring.

Yet the report makes clear that optimism should not be mistaken for immunity. Micro SMBs continue to experience the weakest financial health overall, with many citing cost increases and delayed customer payments as persistent challenges. Without adequate working capital support, their survival confidence could quickly erode if conditions worsen.

The Role of Demand

For micro SMBs, stronger customer demand is the single biggest driver of improvement. More effective marketing and cost control are also making a difference, underscoring how growth and efficiency reinforce one another. This suggests that targeted solutions — from digital invoicing to receivables automation — can be critical levers to translate confidence into sustained expansion.

Confidence rebounded: 75% of micro SMBs are “very” or “extremely” confident they will survive the next two years, up from 68% in March.

Biggest jump: That 7-point increase was the steepest improvement among all business-size categories.

Fragile foundations: Micro SMBs continue to report the weakest overall financial health compared to larger peers.

Cost exposure: Rising goods and services costs disproportionately strain micro SMBs, with cash flow and late payments hitting them hardest.

Demand lifeline: 36% of micro SMBs say stronger customer demand is improving their financial health, the most-cited positive factor.

Efficiency levers: Many micro SMBs point to improved cost control and marketing effectiveness as supporting their recovery.

Uneven progress: Even with rising confidence, micro SMBs remain more vulnerable than mid-sized firms to shocks in liquidity and payment flows.

The report paints a picture of micro SMBs as both resilient and vulnerable: increasingly confident about their future, yet still operating on fragile financial ground. Their survival will hinge on sustaining customer demand while mitigating cash-flow risks. For financial services providers, the opportunity is clear — deliver tools that strengthen liquidity and streamline operations, and Main Street’s smallest businesses can fuel not only their own growth but the prosperity of the local economies they support.