Momentum With Receipts: Small Business Hiring and Formation Both Accelerate
Bank of America and Census Bureau data both show small-business momentum building — hiring and profitability at 2026 highs, business formation at a record H1 pace — while an SBA-lending startup targets the shrinking pool of banks still willing to make 7(a) loans.
Key Trends
- Update: Friday’s brief flagged rising NFIB hiring intent alongside climbing bankruptcy filings — a “sentiment vs. reality” gap. New data narrows that gap: Bank of America Institute’s Small Business Checkpoint found its alternative hiring indicator up 21% year-over-year in July, and profitability growth hit its strongest level of 2026, with transportation and manufacturing leading. NFIB’s own hiring-plans reading for July reached its highest level since 2022.
Review
“alternative hiring indicator up 21% year-over-year” — this is Bank of America Institute’s own proprietary metric about its own data, with no independent corroboration cited; official does not mean corroborated — suggested action: add unverified flag.
- New business formation is running at a record pace: the Census Bureau’s July Business Formation Statistics show 578,926 seasonally adjusted applications, up 8.1% from June. Through the first half of 2026, 3.49 million new businesses have been formed nationwide — up 14% year-over-year and the highest January-through-June total on record.
- AI adoption among small businesses has more than doubled since 2023: a U.S. Chamber of Commerce Foundation survey of 750 owners, fielded in May and June and published July 14, found 89% now use AI in some capacity, up from 36% in 2023, with marketing content (68%), customer communication (52%), and administrative tasks (47%) the leading use cases.
Review
“89% now use AI in some capacity, up from 36% in 2023” — self-reported survey figures from the sponsoring organization, single-sourced with no independent corroboration — suggested action: add unverified flag.
Notable Businesses & Launches
- Lendesca publicly launched an AI-native SBA lending platform on August 18, aimed at banks that have exited 7(a) lending as the program concentrates among fewer, larger players — the top 10 SBA lenders now originate 27.2% of all 7(a) volume, led by Live Oak Bank. Lendesca handles borrower sourcing, underwriting, closing, and servicing across SBA 7(a), USDA, and commercial term loans, letting a partner bank add SBA volume without building a dedicated SBA operations team, while the bank keeps credit authority, funding, and the customer relationship.
Funding & Investment
No significant developments today.
Regulatory & Economic Context
- The Federal Reserve held its federal funds rate at 3.50%–3.75% at its July 29 meeting, a 9–3 vote that drew the first three-way, same-direction dissent from regional bank presidents (Hammack, Kashkari, and Logan, all pushing for a quarter-point hike) since September 2016 — a signal of real disagreement inside the Fed over how long above-target inflation can go unanswered. Minutes from that meeting are due for release this afternoon and could sharpen the odds of a September move.
- Update: The Section 338 tariff flagged in Friday’s brief took effect at 12:01 a.m. ET today — a 50% duty on Canadian motor vehicles, alcoholic beverages, dairy, furniture, cement, plywood, and other goods, with no exemption for USMCA-qualifying products and no delay reported.
Review
“took effect at 12:01 a.m. ET today… no delay reported” — contradicted by multiple outlets (CBC, NBC News, Axios, The Hill, BNN Bloomberg, CP24, all dated 2026-08-19) reporting Trump announced a 3-day pause less than two hours before the deadline, postponing implementation to end-of-day Aug 21; the linked GHY source is outdated — suggested action: fix.
Takeaway
Takeaway
Two independent data sources — a bank’s internal payments data and the Census Bureau’s application counts — now point the same direction as NFIB’s survey: small-business hiring, profitability, and formation are all accelerating at once. That’s a stronger signal than sentiment alone, because it’s not owners saying they feel good, it’s hiring and incorporation actually happening. The open question is whether Lendesca’s bet — that SBA lending capacity, not credit appetite, is the bottleneck — is right; if new formations keep outpacing the shrinking pool of banks willing to originate 7(a) loans, that gap becomes the next story to watch.