Between the Lines: The 2026 Momentum Report
Part 1 of 3: When the Market Moves Faster Than You Do
This is the first in a three-part series examining the 2025 patterns driving the $2.5 trillion small business marketplace into 2026. Each installment focuses on one critical pattern and the stories that reveal it.
Series Introduction
Everyone read the same headlines in 2025.
SMB confidence soared and stayed soaring.
Business formations hit 535,000 in November alone, on track for our 3rd record-setting year in the last five.
SMBs adopted AI (in its purest use form) at rapidly increasing rates. Some say as high as 92%.
That dead-sexy product category – “embedded finance” – suddenly found itself the center of attention, with 90% of SMBs deeming it “essential.”
Meanwhile, 46% of SMBs got hit by cyber-attacks this year, while only 17% had cyber-insurance.
Like you, my head is spinning with digits.
These numbers spiced up McKinsey reports and SMB podcasts and Google pitch decks and our own conference panels.
But here’s what I think most of us missed: we kept track of what was “happening” but we spent far too little time dissecting what it meant, or more to the point, what the numbers are foretelling.
And more importantly, I haven’t seen much conversation yet about what’s carrying forward into 2026 with enough force to reshape the $2.5 trillion small business marketplace.
That’s what momentum is. Not what happened. What’s still happening.
The patterns with mass and velocity.
Over the next three days, I’d like to open the conversation up to “Max Flow.”
Let’s start our series with five stories that show how SMBs are evolving faster than the 100s of the familiar B2SMB names who serve them.
1. SMBs Integrated AI Into Operations – In Huge Numbers
We blew it here.
We read it wrong: the drumbeat of negative anecdotes and analysis we heard over the first half of 2025 from our constituency of B2SMB executives.
We heard that AI adoption amongst SMBs had slowed greatly, even dried up, across our B2SMB Enterprise Member-base.
Made sense, we thought, as we heard endlessly that SMBs were struggling greatly with AI implementation – a struggle they were not getting help addressing from their familiar B2SMB vendors.
We figured that the almost universal observation of “market softness” meant that SMBs were souring on AI.
On the contrary.
SMBs were simply (and very quietly) adopting AI for their own needs and in their own way, and in many cases, outside the channels of major B2SMB Enterprises.
According to the rapidly evolving metrics tracking total AI adoption, Small Businesses are creating their own revolution.
Amongst many reports over the last 6 months, the aggregate numbers are becoming much clearer.
Typical is Counterpart’s Small Business Insights Report, which found 92% of small businesses had integrated AI into their operations.
- 58% report AI saving them over 20 hours per week.
- 70% rely on AI for automation.
- Over 50% leverage it for research and analysis.
- 53% percent use AI-powered chatbots for customer service.
Counterpart called it the “fastest technology adoption curve in small business history,” outpacing smartphones and the internet.
SMBs didn’t wait for enterprise-grade or enterprise-generated AI solutions.
They found accessible tools and implemented them faster than Fortune 500s finished their C-Suite alignment debates.
This happened because AI became cheap and simple, not because it became enterprise-ready. Twenty dollars a month. Intuitive interfaces. Immediate value. Fitted to need. And most importantly, usable.
A coffee shop owner can suddenly answer customer, inventory, pricing and other core business questions with the same depth as Starbucks with a billion-dollar data science budget.
The technology that we presumed to require expert implementation and premium pricing is being adopted pragmatically by people who just want to save 5, 10 or 20 hours a week.
They’re not buying AI strategy. They’re buying time back.
For large-scaled B2SMB sellers, the value of your AI is rooted in what problem your AI solves for your SMB customer.
Like so many things “engineered” for SMB purchase, AI has no value if it doesn’t begin and end with an immediate, close-in problem solved.
AI in its most direct form is exactly what SMBs say they need: a problem solver.
If your solution requires explaining why your AI matters, you’ve already lost to the tool they found on YouTube that just works for them.
Q: What are you building that actually saves someone 20 hours a week? And can they get value from it in an afternoon, or do they need your implementation team first?
2. New Business Starts in 2025 Hit Another Record
The US Census Bureau’s December 2025 Business Formation Statistics reported 535,041 business applications in November 2025, up 7.1% from October.
The year averaged 478,800 new business formations per month, representing a 435% increase since 2004 when the average was approximately 110,000 per month.
Umm… your total addressable market grew by 19 million customers since 2020.
This cohort was born digital. They’re fluent in subscription software, expect consumer-grade experiences in business tools, and have zero patience for friction.
They learned about SaaS from Netflix, not from enterprise software sales cycles. They expect to sign up in three clicks, get value immediately, and switch providers without penalty if something better comes along.
Traditional B2SMB sales approaches built around demos, proposals, and annual contracts don’t match how this generation buys. They’re comparison shopping on review sites, testing products through free trials, and making purchase decisions before ever talking to sales.
And their asking Chat GPT for recommendations.
So – incoming reality check here – imagine your SMB customer evaluating your offering with the collective intelligence of all history?
For B2SMB sellers, this TAM-boom creates opportunity and challenge simultaneously. The market is enormous and growing. But your buyer personas from 2020, even 2023, are obsolete.
Your go-to-market strategy, product design, and customer success approaches must evolve to serve entrepreneurs who expect Stripe-level onboarding, Claude-level depth and Amazon-speed everything.
Can someone sign up for your product right now, without talking to sales, and get value in under five minutes? If not, you’re invisible to millions of new entrepreneurs entering the market.
3. 96% of SMBs Plan Payment Technology Upgrades
Business Wire recently reported that 96% of US SMBs accepting in-person transactions plan to upgrade their payments technology in the next 12 months.
Why? Because their customers are demanding it now.
Payments have rapidly evolved from background utility into strategic competitive advantage into tactical, practical necessity.
SMBs view payment innovation as a key driver of customer success and growth, not just a way to collect money.
The commoditization of basic payment processing is complete. SMBs now expect advanced capabilities like instant settlements, integrated financing, fraud protection, and data analytics as standard features.
When 90% of SMBs say they will pay premium prices for better payment efficiency, that’s a market explicitly telling you that payment friction is costing them customers.
The rise of BNPL, digital wallets, and embedded payments created new expectations for flexibility and convenience. Small businesses that offer superior payment experiences gain competitive advantages in customer acquisition and retention. Those that lag behind lose sales to competitors with smoother checkout.
For B2SMB sellers, payment capabilities have become table stakes, especially in retail, hospitality, and service sectors. The willingness of SMBs to pay premium prices for payment efficiency creates opportunities for differentiation and revenue growth, but only for platforms that treat payments as strategic, not operational.
Do you offer instant settlements, BNPL options, digital wallet integration, and fraud protection? If your payment features lag behind consumer expectations, you’re creating friction in the customer experience. What would it take to make payments invisible in your platform?
4. 90% of SMBs Now Call “Embedded Finance” Essential to Everything
In September 2025, PYMNTS found that 90% of SMBs say embedded finance (“the integration of banking and other financial services into nonfinancial apps and services”) is now essential to their operations.
Financial services have stopped being a separate vendor relationship.
SMBs now expect their day-to-day software to provide lending, process payments, and manage cash flow without leaving the platform.
This is about removing friction. When your business software can see your invoices, your revenue, and your cash flow but can’t advance you capital based on that data, that’s not a missing feature.
That’s a broken customer experience.
Shopify didn’t disrupt banking with superior financial technology. They disrupted it by doing what banks should have done years ago: meet customers where they already work.
Shopify proved that software platforms are now financial operating systems, and traditional boundaries between SaaS and financial services have collapsed.
For B2SMB sellers, the strategic question is simple: can your customers access capital, make payments, and manage finances without leaving your platform? If not, you’re creating friction that embedded-finance competitors will exploit. Every SaaS company without a financial services strategy is now competing with one hand tied behind their back.
Are you building embedded finance capabilities, partnering for them, or watching customers consolidate to platforms that already have them?
5. Did You Miss It? The Tax Man Changed Your 2026 Game for the Good
A brief trip into the dense jungle of the US tax code…
The US Chamber of Commerce reported in August 2025 that the Section 179 deduction was doubled to $2.5 million as part of the ‘One Big Beautiful Bill’ provisions. Additional changes included bonus depreciation modifications, R&E deduction updates, and employer credit expansions, all creating significant incentives for SMB capital investment and equipment purchases.
This is the equivalent of a 21% to 37% discount on qualified purchases, depending on tax bracket.
Yet most B2SMB sales teams aren’t leading with this story.
Section 179 allows SMBs to immediately expense qualified purchases rather than depreciating them over years.
For a business in the 30% tax bracket buying $100,000 in equipment, that’s $30,000 in immediate tax savings.
That’s not a nice-to-have benefit. That’s the difference between ‘maybe next quarter’ and ‘send the contract today.’
Most B2SMB sellers mention tax benefits in footnote disclaimers instead of leading with them. This misses fundamental SMB buying psychology.
Small business owners don’t just – and never have – buy product features.
They buy outcomes. And reducing tax liability is a tangible, measurable outcome.
For B2SMB sellers of capital equipment, technology, or other qualifying assets, tax incentives create natural buying windows.
Quarterly-ends aren’t about budget flushes. It’s about tax strategy. Every year-end deal could close faster if you led with ‘this investment pays for itself in tax savings before we even calculate operational ROI.’
Does your sales team know how to calculate Section 179 benefits for your specific solution? Can they articulate it in one sentence? If not, you’re leaving deals on the table while tax-savvy competitors close business.