The Evidence Standard

Key Trends

• Business formation accelerated in May 2026: the Census Bureau’s Business Formation Statistics show 523,971 applications, up 3.7% from April, with projected formations within four quarters rising 3.3% — a reversal from April’s divergence between application intent and durable starts.
• Small businesses are cautiously optimistic despite a difficult operating environment: the Dallas Fed’s 2026 Communities report finds operators navigating tariff uncertainty and technology transitions without abandoning growth expectations.
• AI adoption has shifted from novelty to operational necessity: the SBE Council’s 2026 Small Business Tech Use Survey finds 82% of small business employers have invested in AI tools, with the median business running five tools spanning assistants, marketing platforms, and workflow automation.
• Nearly four in five small business owners say AI is more useful than it was a year ago, with adoption increasingly driven by practical value rather than competitive pressure, per Small Business Expo research.

Notable Businesses & Launches

• Pax8 unveiled Managed Intelligence solutions at its Beyond 2026 conference on June 8, giving channel partners a new toolkit for delivering AI-backed outcomes to SMB clients through the platform’s global marketplace.
• ZenBusiness launched AI-ready infrastructure for business formation and compliance, drawing on data from nearly one million businesses to replace disconnected compliance workflows with done-for-you automation.
• Asure Software is presenting at SHRM 2026 (June 16–19), showcasing expanded payroll, HR, tax, and workforce management capabilities aimed at the SMB market.
• The share of new business owners launching with over $500,000 in startup capital rose to 31.6% in 2026, up from 27.5% in 2025, with the $1 million-plus cohort growing 3.6 points — a signal that better-capitalized founders are entering the market in greater numbers.

Funding & Investment

• Groundfloor launched its SMB Growth Fund on June 8, offering accredited investors and qualified purchasers access to institutional-grade private credit through Homegrown’s Neighborhood Network Expansion Fund; the vehicle targets a 13–15% net IRR with an offering window closing July 10.
• The fund is structured to eliminate cash drag: investor capital earns 8% on a six-month Groundfloor note during deployment — bringing revenue-based lending to multi-location brick-and-mortar brands through a channel typically reserved for institutional players.
• The Federal Reserve’s 2026 Small Business Credit Survey found 46% of applicants received the full loan amount requested, up from 43% the prior year but still below pre-pandemic norms; applicants at small banks fared best at 57% full approval.
• About one-third of firms that needed financing faced a persistent funding gap despite applying — the structural shortfall that private credit vehicles like Groundfloor’s are explicitly targeting.

Regulatory & Economic Context

• The SBA published a proposed rule on June 11 to overhaul the 8(a) Business Development Program: race-based presumptions of social disadvantage are eliminated, and all applicants must now submit verifiable, fact-based evidence of disadvantage regardless of race. The public comment window is open until July 13 (Docket ID SBA-2026-0133).
• The rule follows a year of enforcement: the SBA suspended over 1,000 8(a) firms in January 2026 for failing to produce eligibility documents, and initiated termination proceedings for roughly 620 more in March — shrinking the program’s participant base before the formal rule change arrives.
• A final rule on small business lending under Regulation B (Equal Credit Opportunity Act) takes effect June 30, with a compliance date of January 1, 2028 — giving lenders 18 months to build out new data collection and fair-lending reporting infrastructure.
• The Federal Reserve has held rates at 3.50%–3.75% through all three 2026 FOMC meetings; average bank business loan rates range from 6.8% to 11%, keeping the cost of capital elevated for businesses without strong credit profiles.

Takeaway