Increase in Tariffs and Amendments to SBA Rules Hinder Second Quarter Small Business Revenues
Slowdown in Small Business Sales Due to Tariffs and SBA Changes
According to the Q2 2025 Insight Report from BizBuySell, the small business sales market has experienced a modest slowdown in the second quarter of 2025, primarily due to tariffs and changes to SBA loan requirements.
The report reveals a 4% year-over-year decrease in business-for-sale transactions, with the total deal value and median sale prices falling as buyers reassess risk in response to the trade policies and tighter lending rules.
Tariffs announced by the Trump administration on imported goods have caused fresh uncertainty, especially for businesses reliant on global supply chains. Nearly half of small business owners reported higher input costs due to tariffs. Persistent elevated inflation, with 55% of owners reporting inflation remains high, compounded cost pressures, leading two-thirds of business owners to raise prices.
However, customer responses have been mixed, and buyers have become more cautious due to uncertainty about financial performance caused by tariffs, slowing deal flow. Tighter SBA lending and stricter underwriting requirements also contributed to deals slowing, shifting demand in favor of buyers seeking lower-priced deals.
The market is expected to grow moderately, though unevenly, with businesses with strong financials and stable demand likely to continue to draw interest. Sellers should be ready to negotiate, possibly by accepting a fair valuation and offering seller financing to attract serious buyers.
SBA rules now restrict seller notes to covering only 50% of the buyer's equity injection and place them on full standby, making them essentially interest-free, unsecured loans. This change may limit who qualifies for loans, potentially lengthening sales cycles.
In the service sector, businesses such as auto repair, health, and logistics remain in high demand. On the other hand, retail transactions saw a 2% year-over-year uptick, with a 13% increase in median sale price and a 14% boost in median cash flow.
The share of unemployed buyers has also increased, and buyers are gravitating toward smaller, less risky deals, contributing to a 4% year-over-year decrease in total enterprise value. Overall, 2,342 businesses changed hands in Q2 2025, a slight drop from Q1 and a significant drop from a multi-year high in Q2 2024, indicating a market slowdown triggered by tariffs and lending changes.
In sectors like manufacturing, transactions fell 28% year-over-year, with declines in revenue and cash flow. Restaurants experienced a rise in sale prices by 3%, but profitability declined due to food costs and inflation outpacing revenue growth.
Despite the challenges, buyer interest remains strong, especially for recession-resistant sectors such as home services, healthcare, logistics, and delivery operations. Sellers who adapt to the current market conditions and are willing to negotiate may find success in closing deals.
Below are two sentences that contain the required words in the given context:
- Stricter SBA lending requirements, such as the new rule restricting seller notes to 50% of the buyer's equity injection, have contributed to a greater caution among small-business buyers in the finance market.
- The slowdown in small-business sales can be attributed, in part, to the implications of tariffs on imported goods, which have led to higher input costs and, consequently, rising prices for many businesses.
