An Update on the State of Small Business Funding

By SBE Council at 12 September, 2025, 12:15 pm

by Raymond J. Keating -

Entrepreneurship is vital to economic growth, which means that the funding of small businesses also is essential to the economy.

Let's take a quick look at the latest data on investment in and lending to small businesses.

First, according to the latest PitchBook-NVCA Venture Monitor, produced by National Venture Capital Association and PitchBook, "In Q2 2025, VC firms deployed $69.9 billion across an estimated 4,001 deals, representing a sharp 24.8% QoQ decline in deal value."

But as noted in the following chart from the report, deal value has moved up - largely tied to AI - in the most recent three quarters, while deal count has been relatively flat since early 2023.

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On deal counts by business stage, pre-seed/seed deals have declined notably since the first quarter of 2023, from 1,311 in the first quarter 2023 to 1,164 in the fourth quarter 2024, 1,073 in the first quarter 2025 and then 793 in the second quarter 2025. Meanwhile, early-stage VC deals was uneven in 2024, with growth in the fourth quarter 2024 (from 1,032 in the third quarter to 1,132 in the fourth) and first quarter 2025 (1,235), but then a decline in the second quarter of 2025 (1,062).

Meanwhile, according to data from the FDIC, commercial and industrial (C&I) loans of less than $1 million have grown steadily since the fourth quarter 2022 - from $386.4 billion as of the fourth quarter 2022 to $421.1 billion as of the second quarter 2025. Also, the number of such loans went from 25.4 million as of the fourth quarter 2022 to 26.3 million as of the second quarter 2025.

These two measures present a mixed story on small business funding recently, which fits into a mixed story on the economy overall.

Indeed, when asked if limited access to capital was restricting the growth of their businesses or operational capacity, 55% of small business owners said that was in the case in SBE Council's most recent Small Business Check Up Survey (July 2025).

If elected officials and policy makers are serious about the need for entrepreneurs grow successful businesses, then burdening investors and financial institutions with increased taxes and regulations makes no sense. Thankfully, the tax and regulatory pendulums have swung in a more rationale direction. Robust economic, income and employment growth in the U.S. means not only incentivizing entrepreneurship, but also incentivizing investment and lending so that small business owners have the capital they need to launch and grow successful enterprises.

Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council. He is the author of " The Weekly Economist " book series, and 10 Points from Walt Disney on Entrepreneurship .