Small Business Checkpoint

March 2023

Feeling the squeeze

Small Business Checkpoint is a regular publication from Bank of America Institute. It aims to provide a real-time assessment of small business spending activities and financial well-being, leveraging the depth and breadth of Bank of America’s proprietary data. Such data is not intended to be reflective or indicative of, and should not be relied upon as, the results of operations, financial condition or performance of Bank of America.

Key takeaways

  • Small businesses are facing crosscurrents, but headwinds from higher costs appear to be blowing slightly stronger than consumer-related tailwinds, leaving profits increasingly squeezed. In February, the ratio of inflows to outflows in Bank of America small business checking and savings accounts, which we view as a proxy for profits, was the lowest February reading over the past five years. That said, for January and February combined, net account inflow remained positive.
  • Specifically, although resilient consumer spending has supported business revenues, the cost of operations for small businesses is still growing. Average rent payment growth for small businesses remains high at nearly 20% year-over-year (YoY) as of February with retail spaces seeing bigger increases than office and industrial buildings.
  • Interestingly, despite economic challenges, new business formations are at historically high levels according to Census Bureau data. Demand from changing consumer preferences since the pandemic might be one driver, but we think rising interest rates and tighter lending standards mean formations will likely moderate.


Read our full analysis for a more in-depth look at these trends.