In the face of economic challenges, a notable sense of optimism is emerging among many small businesses in America, presenting a unique prospect for the payments industry.

A recent study by PYMNTS Intelligence reveals that overall confidence among small and medium-sized businesses (SMBs) increased in June, despite persistent economic headwinds. micro SMBs, in particular, showed a significant boost in confidence.

However, the picture isn’t uniform. SMBs with annual revenues between $150,000 and $1 million experienced a slight dip in confidence compared to March.Industries such as construction and utilities,along with self-reliant retailers,are generally experiencing improved financial health,while hospitality businesses are facing greater challenges.

While micro SMBs boosted overall confidence, 14% reported being in a worse financial position than six months prior, double the rate of higher-revenue SMBs. These smaller firms are especially vulnerable to rising costs for imported goods or services, cash flow issues, and delayed customer payments.

Access to capital remains a concern. A Goldman Sachs report in June indicated that over 80% of small business owners who applied for a loan or line of credit in the past year found it difficult to secure affordable capital.

Factors Fueling Optimism

The resilience of small businesses despite economic headwinds can be attributed to several factors.

“small businesses are no strangers to adversity – resilience is in their DNA.”

Consumer spending remains a key driver. Data from the Bureau of Economic Analysis shows a 0.3% increase in consumer spending in June, primarily on food, beverages, clothing, shoes, and recreational goods. This increase coincided with a similar rise in disposable income. Four in 10 SMBs reported benefiting from rising demand, according to the PYMNTS Intelligence report.

Business owners are also employing strategies such as introducing new products and services, implementing technology upgrades to boost efficiency, and focusing on improved marketing and customer outreach.

Andrew Clarke,president and founder of Ground Floor Partners, noted that some of his clients in construction, plumbing, and electrical services have maintained higher prices than competitors by offering superior customer service. These businesses can absorb tariff-related cost increases by reducing margins without significantly impacting their performance.

A favorable tax surroundings also plays a role. The “One Big Stunning Bill Act” made a lucrative tax deduction permanent, benefiting many small businesses and self-employed individuals. The deduction allows small business owners to deduct a percentage of their qualified business income, reducing their taxable income.

Implications for the Payments Industry

The overall optimism among small businesses is a positive sign for the payments industry. As SMBs seek to grow, they often invest in digital technologies such as contactless payments, integrated online checkout systems, point-of-sale systems, and faster funding solutions. They require flexible, secure, and scalable payment methods.

As businesses expand their operations, their need for seamless and cost-effective payments increases. this presents an opportunity for the payments industry to support these businesses with payment processing solutions, analytics, financing, and fraud protection.

Dave Charest, director of small business success at Constant Contact, emphasizes the importance of staying close to customers, adapting quickly, and delivering real value.