Ahead of Small Business Week, an informal survey of Bay Area small business owners found that they’re suffering — and it’s not just from tariff uncertainty.
Bay Area small business owners were more likely to say their revenues declined last year and expect the same this year compared with their counterparts elsewhere in a handful of Western states, according to a survey of clients conducted by Oakland-based TMC Financing.
TMC works with small business owners to secure SBA 504 loans that are often used to finance the purchase of real estate used in the operation of a business. The survey covered TMC’s clients in California, Arizona, Nevada, Oregon and Hawaii.
“Bay Area respondents seem to be more cautious and conservative when considering expanding their business,” said Amanda Near, marketing manager of TMC Financing. “Bay Area businesses are slightly more cautious about expansion, especially when it comes to leasing.”
TMC, a nonprofit company, works with banks to provide SBA-backed financing to its clients. TMC said it accounted for almost 10% of SBA’s $6.66 billion in total 504 loans made nationally in fiscal 2024.
Bay Area respondents accounted for more than a third of all survey respondents, with 100 of the 283 total respondents based in the region. TMC’s client survey found that 47% of Bay Area small business owners saw revenue rise in 2024 versus 53% of all respondents, while 28% of Bay Area respondents saw revenue drop in 2024 compared with 21% of total respondents. A quarter of respondents in the Bay Area said their revenue last year was unchanged versus 26% from all respondents.
Revenue expectations for 2025 didn’t fare much better, with 51% of Bay Area small business owners telling TMC they expected sales to be higher in 2025, while 60% of all respondents expect higher revenues this year. The survey found 12% of Bay Area small businesses anticipate their revenue will fall in 2025 compared with 10% of all respondents saying that. And 37% of Bay Area respondents see this year’s revenue unchanged from 2024 compared with just 30% of all respondents who see no change in their revenue this year.
Only a third of Bay Area small business owners say they plan to hire this year compared with 43% of all respondents planning to add to their payroll. The survey found 60% of Bay Area TMC clients plan to maintain current staffing compared with about 51% of all respondents saying they plan to maintain current staffing. Roughly 7% of respondents in the Bay Area and overall said they plan to cut staff.
“Bay Area businesses are more inclined to hold staffing steady, with less hiring optimism than the full sample,” Near said.
When it comes to expansion and their real estate plans, 75% of Bay Area small business owners said they have no plans to expand compared with 70% of all respondents. Just 1% plan to lease in the Bay Area versus 3% of all small businesses surveyed saying they plan to lease this year.
TMC often works with small hotel operators, doctors and dentists as well as general contractors and engineering firms. Clients are also concentrated in homebuilding and maintenance areas such as plumbers, painters, electricians, concrete providers and architects.
The pessimism among Bay Area small business owners stands in stark contrast to Morning Consult’s recent finding that consumer optimism is on the rise in the San Francisco metro area. The region is also seeing signs that return-to-office policies are working, according to the latest data from Placer.ai. That’s important for restaurant owners and other small businesses that serve workers coming to their offices.
The survey was conducted in late February and in March, ahead of President Trump’s tariff announcement on April 2. Some Bay Area small business owners and their representatives say the higher tariffs could threaten their ability to continue operating.
Tariffs as high as 145% on goods from China are especially painful in San Francisco’s Chinatown neighborhood.
“I believe nobody can afford that,” Chinatown Merchants United Association Chairman Ed Siu told the Business Times in mid-April. “The merchants say, ‘If I can’t sell those items, if I cannot do business, why not shut down the business? Cut the losses.’
“Some of them are considering if it goes on like this to shut down the store,” Siu said.
National Small Business Week might be a time for shoppers to help boost the spirits of local shopkeepers and restaurateurs. San Francisco has planned a series of local events for May 5-9.