Almost half of small businesses report an increase in costs - SFA Survey

June 26, 2025
  • Almost a third of all small businesses report an increase in labour-related costs in past 12 months
  • Survey shows an 11.7% increase in business costs among businesses that have reported increased costs
  • Borrowing among small businesses has fallen significantly
  • Second annual SFA / Amárach nationwide survey of small businesses

Thursday, 26 June 2025 – Forty-nine percent of small businesses have reported an increase in business costs in the past 12 months, according to the Small Firms Association’s Small Business Survey, which was conducted by Amárach. Over 350 small businesses, nationwide took part in the survey in recent weeks and were asked questions related to business costs and business sentiment. Although the percentage of small businesses reporting increased costs are significantly down from last year (84%), businesses are still struggling with a high-cost base with 44 percent of businesses reporting no change in costs in the past year.

Business costs remain a challenge for many small businesses with an average increase in costs at 11.7% in the past 12 months, among the businesses that have experienced increased costs. However, that is a decline from 16.6% rise in business costs reported in last year’s survey. Labour-related costs remain the biggest challenge with 31 percent of all businesses reporting that employment costs have increased in the past 12 months, however that is a decline from 48 percent of all businesses in last year’s survey.

The survey also showed that borrowing has declined among small businesses in the past twelve months, with only 13 percent claiming to have done so in this year’s survey compared to 40 percent last year. Furthermore, the percentage of businesses that stated that they have not borrowed any money in the past two years has increased from 54 percent last year to 81 percent this year. Debt levels have decreased but almost have of businesses surveyed say that there are barriers to accessing needed finance.

Reduced borrowing has impacted the ability for small businesses to operate with 54 percent of businesses surveyed saying they could not trade beyond 6 months without additional funding, a significant increase from 35 percent reported in last year’s survey. Of the businesses that have successfully sourced funding in the past 12 months, 62 percent have borrowed from the pillar banks, an increase of 24 percent. However, 22 percent have borrowed money from family and friends, an increase from 19 percent reported last year.

With the possibility of tariffs between the EU and the United States, 6 out of 10 firms are currently taking action to mitigate against tariffs while 22 percent of small businesses are reviewing spending plans.

Commenting on the small business survey, Director of the SFA, David Broderick said:

“The clear message from this survey is that almost all small businesses are operating in a high-cost environment in recent years. For many, this is not sustainable.

“It is alarming to see that more than half of businesses surveyed will not be able to trade beyond six months without additional funding. This comes amid a decline in borrowing which may be attributed to lower debt levels and that almost half of businesses surveyed say that there are barriers to accessing finance.

“Overall, this survey highlights the need for urgent policy action from the Government to mitigate against high business costs. Budget 2026 presents an ideal opportunity for Government to act decisively. The SFA recently participated in the Government’s first ‘cost of business’ forum which was a welcome opportunity to highlight the pain that small businesses must endure and the fear of a looming trade war between the EU and the United States.

“The survey’s findings show that there are opportunities when it comes to accessing finance. Only one in seven small businesses have pitched for public service contracts. While a few sectors are not traditionally part of the public consultation process, I think the Government has a duty to make the public procurement process a lot easier for small firms.”

When businesses were asked to rank the most challenging costs, 20 percent stated that employment costs were the most challenging. Twenty-five percent of small businesses ranked mortgage or rent, payments as the most challenging. Of all the businesses asked, 12 percent stated regulation costs with 14 percent citing raw material costs as the most challenging costs.

The survey also stated that 81% of small businesses said that the Government needs to do more to help SMEs, up from 74% last year.

 

ENDS

Note to Editor:

  • Please see the full report attached to this email.
  • The Small Firms Association proudly represents a diverse membership of businesses employing up to 50 employees: homegrown and spanning every sector of the economy with members found in every town and every city in Ireland.
  • SFA Director David Broderick is available for interviews. For more information and to arrange more interviews, please contact SFA Public Affairs Lead, Jonathan McDade at mcdade@sfa.ieor 0876253551