Opinion: Bet on Small Business: Why Aggressive Rate Cuts Matter

The Federal Reserve Faces a Crucial Decision

The Federal Reserve is at a crossroads, needing to decide whether to take bold action by lowering interest rates or risk the stagnation of America’s job market. High borrowing costs are placing a heavy burden on small businesses, slowing down home construction, and threatening the growth that has kept the economy resilient. To prevent further job losses, the Fed must act decisively and implement three consecutive rate cuts of 50 basis points.

Alarming Job Market Trends

Evidence is mounting that the job market is under pressure. In May and June 2025, job numbers were revised downward by 258,000. Then, on September 9, the Bureau of Labor Statistics revised U.S. job figures for the 12 months ending March 2025, cutting an additional 911,000 jobs. This amounts to a total reduction of 1.5 million jobs over two years. Initial jobless claims are also rising, with 235,000 new claims reported, exceeding expectations and showing an upward trend compared to the previous week's report.

Workers are feeling the shift in the job market. In July, 62% of Americans expressed concerns that unemployment would rise over the next year, marking the highest level of pessimism since the Great Financial Crisis of 2008.

Small Businesses Are Central to the Economy

Small businesses play a critical role in the American economy. They employ 61.6 million Americans, nearly half of the workforce, and are responsible for creating two out of every three new private-sector jobs. These businesses are often the first to feel the impact of rising capital costs because they lack access to bond markets or stock flotation. Their growth relies heavily on bank loans and credit lines, which have more than doubled in cost. For many entrepreneurs, interest rates have risen significantly, making it difficult to hire new workers or expand operations.

Impact on Homebuilding and Consumer Confidence

High interest rates are also stifling homebuilding, driving up housing costs, and reducing consumer confidence. This affects small firms that depend on strong local economies and healthy consumer demand. When households feel financially strained, they tend to spend less on restaurants, retail shops, and service businesses, leading to slower hiring and fewer opportunities.

The Path to Sustainable Growth

Despite being the largest and most productive economy in the world, the U.S. could be much stronger. For broad prosperity, the economy must consistently grow at 3% or better. However, for decades, we have struggled to maintain this pace, with fluctuations that create uncertainty for families and hesitation among businesses. It is time to rethink what drives sustainable growth, and the answer lies with small businesses.

Winston Churchill once said that democracy is the worst form of government, except for all the others. Similarly, the U.S. economy is the best in the world but far from perfect. We have allowed growth to become inconsistent and unstable. To remain a beacon of prosperity, policymakers must create conditions that allow small businesses to thrive.

Lower Borrowing Costs Are Essential

This means lower borrowing costs. Small business owners are known for their problem-solving abilities, innovation, and adaptability. However, no amount of ingenuity can offset an interest rate environment that makes investment prohibitively expensive. Without accessible credit, small firms cannot hire, train, or expand. And without small business growth, the entire economy slows.

Critics argue that aggressive rate cuts could reignite inflation. However, inflation has cooled significantly from its post-pandemic highs. Core prices are closer to the Fed’s 2% target, wage growth has stabilized, and supply chain shocks have largely eased. The greater risk now is keeping rates too high for too long, which could stifle the very firms that create jobs and competition.

A Strategic Approach to Rate Cuts

Three consecutive 50 basis point cuts would restore balance. A total reduction of 150 basis points would ease the financial strain on small businesses, send a signal of confidence to markets, and encourage banks to offer credit on fairer terms. This would empower entrepreneurs to leverage, invest, and expand through key expensing provisions in the One Big Beautiful Bill Act.

John Dal Poggetto, owner and president of Dura Crane, Inc., is hopeful about lower lending rates. He believes this will drive building activity and help with industrial expansion.

The Broader Implications

Consider what is at stake. Small businesses account for nearly 44% of U.S. GDP and make up more than 97% of exporters. They are the backbone of communities, from Main Street retailers to construction firms to small manufacturers. When small businesses thrive, America thrives. When they stall, the consequences ripple across the entire economy.

The Fed’s next decision isn’t just about interest rates; it’s about jobs, growth, and the American Dream. To avoid a prolonged slowdown and create an economy that consistently grows at 3% or better, we must empower small businesses. That starts with decisive action on rates.

Supporting Small Businesses

Small businesses don’t want bailouts or special favors. They want the chance to compete, borrow at fair rates, and hire. They want policymakers to understand that they are not just another sector—they are the key to sustainable economic growth.

The Fed has the tools to unlock that growth. It must use them now.