Small Businesses Impacted by Oil Shock

Bank of America aggregated credit and debit card data shows gasoline spending per small business client rose 23 percent year-over-year (YoY) in March – the strongest increase in several years – after declining over the previous two months.

Certain sectors such as agriculture and transportation saw even greater growth as they are more likely to experience more acute pain at the pump, with gas spending growth up more than 25 percent YoY in March.

 And according to the National Federation of Independent Business (NFIB), the Small Business Uncertainty Index rose 4 points from February to 92 in March – well above its historical average of 68 – as a mix of inflationary pressures and geopolitics disrupt revenue expectations.

Beyond direct fuel expenses, higher gasoline prices are feeding into broader cost structures, therefore raising transportation, input and inventory costs for many small businesses, according to BofA.

It said small businesses in transportation, agriculture and construction devote a noticeably larger share of their total credit and debit card spending to gasoline than other sectors.

Because these industries rely heavily on vehicles and equipment, fuel is a core operating expense rather than a marginal cost. In fact, according to Bank of America small business account data, in March, both small transportation and agriculture firms saw a 0.4 percent increase in the share of gasoline expenditures relative to inflows (i.e. revenue) – this is double that of construction and quadruple that of other sectors.

Agricultural businesses are particularly exposed to disruptions from the war in the Middle East given commodities are traded globally, making transportation costs a large component of final prices, according to BofA Global Research. This creates a direct – and rapid – pass‑through from energy shocks to commodity prices. Since Operation Epic Fury (which began on Feb. 28) and its impact on energy prices, freight costs in the U.S. have surged nearly 50 percent for trucks and about 11-17 percent for ocean transportation.

Wholesalers, which face high transportation costs, are another group of small firms highly vulnerable to the oil shock and ongoing tariff pressures.

In Bank of America small business payments data, small wholesalers’ costs associated with inventory (i.e. distributors, truck/freight logistics and other delivery services) surged 62.6 percent YoY in March – the single largest monthly gain since the start of BofA’s data series in 2020.

This surge is echoed in the latest NFIB report, with the number of owners planning inventory investment in the coming months reaching the lowest level since May 2024. Additionally, of the small cohort of firms who pay tariffs directly, these payments were up almost 95 percent from the 2024 average level in March.

One silver lining may be that these payments are starting to fall, and, according to BofA Global Research, lower tariff rates following the Supreme Court's reversal of tariffs imposed with the International Emergency Economic Powers Act are helping offset some of the pain at the pump.

Still, compared to large companies, smaller firms are unlikely to feel relief in the near-term, according to BofA.

Overall, small business profitability growth remains positive and rose 0.3 percent YoY in the first quarter of this year, according to Bank of America internal data.

While that is down from Q1 2025, it is above Q4 2025. And cautious optimism about revenue is prevalent in NFIB survey data, which marked the first decline in March following four consecutive months of improvement.

For now, balance sheets among these companies remain relatively healthy. Bank of America small business credit card utilization rates have risen just slightly above the 2019 average, indicating no great level of credit stress to date.

BofA said this financial stability appears to enable firms to focus on liquidity preservation rather than near-term expansion. To this point, the percentage of small business owners planning to make capital outlays in the next six months from March reached the lowest level since November 2009, according to the NFIB.

 At the same time, more businesses today are choosing not to seek external financing than at any point since the National Small Business Association began its Economic Outlook survey 20 years ago.

This underscores that small businesses will likely see slower anticipated growth and, along with the recent slowdown in Census Bureau business formation, signals some level of slowdown within the broader small business economy, according to BofA.