Open for Business, Closed for Good: NYC's Reform Meets Its Weakest Formation Quarter in Five Years

Key Trends

• NFIB’s new “State of the States” report — a semi-annual rollup of six months of Small Business Economic Trends survey data — puts New York below the national average on expecting the economy to improve, plans to increase employment, and whether now is a good time to expand. NFIB’s state director frames it as resilience undercut by “rising costs and an unforgiving regulatory environment.”

• Small businesses are still absorbing tariff costs rather than passing them all through: per the New York Fed’s Liberty Street Economics, about 80% of firms passed on at least some higher input costs while 60% absorbed some themselves, only 20-30% have fully passed tariffs through via price hikes, and nearly half still plan further increases in the months ahead.

Notable Businesses & Launches

• The SBA named 10 semifinalists — out of 1,182 entrants nationwide — in its Freedom 250 Patriot Pitch Competition, a $1 million prize pool funded by Clover Network for veteran-owned small businesses. Among them: Better Team USA Corp, a Clifton, N.J. outerwear maker headed to the finals in Washington, D.C. this September.

• The SBA and Intel will co-host their third Supplier Matchmaking Expo on July 29 in Scottsdale, Arizona, pairing small manufacturers with aerospace and semiconductor buyers — plus NASA and the Nuclear Regulatory Commission — as part of a domestic-supply-chain reshoring push.

Funding & Investment

• Boston-based SME lender Forward Financing closed $525 million in fresh capital — a $350 million variable funding note facility plus a $175 million asset-backed securitization — to expand lending to small businesses that traditional banks often turn away.

• SMB-banking platform Mercury raised a $200 million Series D at a $5.2 billion valuation, up nearly 50% from its March 2025 mark, months after the OCC gave preliminary approval for Mercury to become a chartered national bank rather than renting one.

  Review

  “Mercury raised a $200 million Series D” — this raise was actually announced around May 20, 2026, roughly two months before this brief, with no date given here — it reads as breaking news — verify / add a dating clue so it isn’t mistaken for a new event.

Regulatory & Economic Context

• The SBA’s pandemic-fraud dragnet keeps widening: a July 8 suspension of 7,800 Wisconsin borrowers tied to $375 million in suspected PPP/EIDL fraud brings the state-by-state total past 150,000 borrowers and $10 billion across California, Ohio, Minnesota, Maine, and Wisconsin. The SBA has also expanded its use of Palantir software to accelerate the sweep.

• Update: Mamdani’s “OPEN for Small Business” package is landing against sobering numbers — roughly 3,540 NYC businesses opened against 8,400 closures in Q2 2025, the weakest net formation quarter in five years, with citywide retail vacancy at 4.4% versus a 3.4% average in 2019. Business groups beyond the restaurant association flagged in our last brief are now on record too: reception is warmer, but advocates call the reforms “only the beginning” and want fines and fees cut in half.

  Unverified

  The Q2 2025 formation/closure and retail-vacancy figures are corroborated across coverage of the reform reception but could not be traced to a single primary NYC EDC or DCP release in this search.

  Review

  “roughly 3,540 NYC businesses opened against 8,400 closures in Q2 2025” — the existing unverified flag addresses only sourcing, not that this data is over a year old and is being used to characterize July 2026 conditions — fix: add an explicit staleness caveat to the flag.

Takeaway