A confluence of demographic shifts, increased government-backed lending, and growing interest from acquisition-minded entrepreneurs is reshaping the landscape for small business ownership in the United States, according to a new report from Austin-based investment and advisory firm Contrarian Thinking.
The firm's third annual State of Main Street 2026 report combines proprietary survey data from its network of business buyers with public data from the U.S. Small Business Administration, U.S. Census Bureau, and Google Trends. It estimates there are 36.2 million small businesses in the U.S., representing 96% of all companies and a substantial share of private-sector employment. Nearly half are concentrated in five states: California, Texas, Florida, New York, and Georgia.
For wealth managers and financial planners, the most consequential trend may be demographic. Contrarian Thinking projects that by 2040, 78.3 million Americans will be at or above retirement age, equal to 22% of the population. The report also notes that 52% of small business owners are 45 or older, and 23% are over age 65. That aging ownership base is expected to drive a surge in succession planning and sale activity. Citing survey data from Live Oak Bank, the report says 70% of small business owners lack a formal succession plan, while nearly one-third expect to transition ownership within five years.
This demographic wave comes as business optimism wanes. A separate survey from Principal Asset Management found that small business optimism fell to 5.59 out of 10, down from 7.51 in 2024, as owners cited inflation, elevated interest rates, tariffs, and supply-chain disruptions as major concerns. Just 17% of employers said they believe the U.S. economy is growing, while recession worries have increased sharply. Even so, Principal found that many small and midsize businesses remain financially resilient, with strong balance sheets, healthy cash flow, and manageable debt levels helping to cushion against economic uncertainty.
For advisors, that combination of owner anxiety and operational stability may create an opening to engage clients on succession planning, liquidity needs, and strategies to preserve business value ahead of a potential sale. As noted in Surveys Reveal Generational Divide in Retirement Planning, Advisors Urged to Broaden Focus, addressing these concerns across age groups is critical.
Financing conditions are also shifting. Through May of fiscal 2025, the SBA approved 78,078 loans totaling $37.3 billion, an 11% increase from the same period a year earlier. SBA 7(a) lending reached $18.7 billion across 69,089 approvals, while 504 loans totaled $6.7 billion through 5,093 approvals. Contrarian Thinking said change-of-ownership loans are among the fastest-growing categories, a sign that more entrepreneurs are using SBA-backed financing to acquire established businesses rather than launch startups from scratch.
Artificial intelligence is another emerging factor, particularly in industries such as home services, logistics, and local consumer businesses, where operators are beginning to automate back-office tasks and improve efficiency. For buyers evaluating acquisition targets, that shift could have meaningful implications for valuation and post-deal planning. Businesses that adopt AI effectively may be able to boost profitability, reduce labor pressures, and create more predictable cash flow, all of which can enhance enterprise value.
“This report examines those shifts from our unique vantage points not as observers, but as active participants,” Codie Sanchez, founder of Contrarian Thinking, wrote in the report. “Through Contrarian Thinking Capital, we invest in software and hardware serving Main Street businesses. Through our Contrarian Academy, we deliver advisory services to thousands of business buyers navigating the acquisition process.”
For advisors, the combination of an aging owner base, rising SBA lending, and AI adoption creates a significant planning opportunity. As highlighted in Northwestern Mutual, Guardian Surveys Reveal Gap Between Financial Optimism and Retirement Readiness, closing the gap between optimism and readiness is essential for clients approaching retirement.
