Small Business and AI: Understanding Adoption and Building Support Systems

Why It Matters

Widespread but uneven AI uptake among small firms signals differing needs for training, financing and technical assistance, affecting productivity and credit risk across sectors. Policymakers, lenders and support organizations must tailor outreach to smaller, older and leisure‑sector firms to avoid widening competitiveness gaps.

Summary

At a San Francisco Fed event presenting 2024–25 Small Business Credit Survey modules, researchers reported that about 60% of U.S. small businesses are either using or planning to use AI, with employer firms and the larger end of the small‑business spectrum (50–499 employees) adopting at higher rates. Adoption varies sharply by industry—highest in finance, insurance and professional services and lowest in leisure and hospitality—and is more common among employer firms than sole proprietors. Among sole proprietors, older business age and owner age correlate with lower AI use, while differences by gender and race are minimal. The findings draw on new SBCS questions added as generative AI spread, and will inform Federal Reserve engagement on small‑business needs.

Original Description

The Federal Reserve’s 2025 Small Business Credit Survey found that nearly half of small businesses are using AI, with an additional 15% planning to adopt AI in the next 12 months.

Join the Federal Reserve Bank of San Francisco’s EmergingTech Economic Research Network on May 19 to explore the implications of AI for small businesses.

The program will include:

• A preview of forthcoming research on small business AI adoption, including differences between employer and nonemployer firms and emerging trends by industry.

• A panel discussion with small business lending and technical assistance practitioners at the forefront of AI-driven changes across the small business ecosystem.

Agenda:

• Introductory remarks

Speaker: Kevin Ortiz, Federal Reserve Bank of San Francisco

• Presentation: AI and Small Business: Findings from the 2025 Small Business Credit Survey

Speaker: Natalie Holmes, Federal Reserve Bank of San Francisco

• Panel discussion: Small Business Development and AI: Opportunities and Challenges

Panelists:

Bulbul Gupta, Pacific Community Ventures

Hope Hartman, Larimer County, Colorado Small Business Development Center

Moderator:

Rocio Sanchez-Moyano, Federal Reserve Bank of San Francisco