Rochester small businesses face cost pressures and uncertainty in lending

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According to the latest National Federation of Independent Business survey, the Small Business Optimism Index fell to 95.3 in May, while uncertainty remained well above historical averages. We spoke with Rochester-area banking, accounting and legal professionals about the challenges facing small businesses today and the strategies they’re using to help them navigate uncertainty.

“Given the current economic climate, small business owners are facing pressure from many directions at once right now,” said Mark F. Schuber, senior counsel and a member of the corporate practice group at Harris Beach Murtha.

Schuber said many businesses continue to grapple with elevated operating expenses, including payroll, insurance and rent, while higher borrowing costs have made it more difficult to access capital.

“Borrowing is still relatively expensive for small businesses,” he said. “Lenders are starting to tighten their standards, so that can often cause small businesses to be priced out of borrowing.”

In response, Schuber says Harris Beach Murtha is encouraging clients to focus on proactive risk management.

“Nowadays we’re seeing more customers come to us with their commercial contracts, or at least their important commercial contracts, in order to tighten the risk allocation and make sure the risk allocation is appropriate for their business,” he said.

He also recommends building flexibility into agreements, including pricing provisions and clear exit clauses that allow businesses to adapt if economic conditions change.

Beyond contracts, Schuber identified cybersecurity as the most significant legal and regulatory issue facing small businesses today.

“Cyber threats are no longer big-company problems,” he said. “They’re everybody’s problem.”

Schuber advises business owners to remain proactive, diversify where possible and invest thoughtfully in technology and cybersecurity protections.

At Community Bank, Anna Clune, senior vice president, regional sales manager, says small businesses continue to face a combination of cost pressures, economic uncertainty, workforce challenges and higher borrowing costs.

“The biggest challenges small businesses are facing right now center around cost pressures, uncertainty, and access to both talent and capital,” Clune said. “While inflation has moderated from its peak, many small businesses are still dealing with elevated input costs — from labor and insurance to rent, utilities and inventory.”

Clune says many small businesses have limited ability to absorb rising costs or pass them along to customers without impacting demand.

“Business owners are navigating questions around interest rates, consumer spending trends and the broader economic outlook,” she said. “This uncertainty often causes them to delay hiring, expansion, or capital investments — even when there are growth opportunities — because they want to preserve liquidity and remain flexible.”

Clune says Community Bank has responded by becoming more proactive and accessible while helping clients navigate a more complex financial landscape.

“At Community Bank, our focus has been on meeting our customers where they are — both in how they do business and how they prefer to engage with us,” she said. “We’re investing in technology so our customers can bank where they want, when they want, while still benefiting from the personalized, relationship-based service of a local banker they know and trust.”

The bank has also expanded its presence in the Rochester market and increased its focus on Small Business Administration (SBA) lending programs, which provide government-backed financing options for qualifying businesses.

“We recognize that lending conditions have changed, and many businesses need more flexible solutions,” Clune said. “That’s why we’ve expanded our SBA lending programs, helping make financing more attainable for a broader range of businesses.”

“The businesses we see succeed are the ones that stay proactive, lean on their networks, and take a thoughtful, forward-looking approach to growth,” she said.

Kristina Stamatis, CPA, a partner at MMB+CO, says uncertainty remains a constant for small businesses, but the nature of that uncertainty continues to evolve.

“Small businesses are navigating a mix of workforce pressure, tax law complexity, and state-level uncertainty,” Stamatis said. “Talent attraction and retention remain uneven, with wage expectations and productivity balancing still in flux. On the tax side, businesses are trying to understand and take advantage of provisions under recent federal legislation while also monitoring how New York may decouple from certain federal rules — creating planning gaps between federal and state outcomes.”

To help clients navigate these complexities, MMB+CO has expanded its role beyond traditional compliance work.

“We’ve shifted from a primarily compliance-based model to a more proactive, advisory-focused approach,” Stamatis said. “That includes more frequent touchpoints, forward-looking tax planning, and integrating specialists—tax, accounting, and consulting—around the client. We’re encouraging scenario planning, including cash flow, tax exposure and entity structure, and helping clients make decisions earlier in the year rather than after the fact.”

Stamatis believes one of the most effective ways for businesses to remain resilient is to build a trusted team of advisors and use them strategically.

“Businesses that perform best are surrounding themselves with a strong core advisor group—a CPA, banker and attorney—and using that team collaboratively,” she said. “Key strategies include disciplined cash flow forecasting, leveraging available tax incentives, and maintaining flexibility in cost structures.”

Warren Miller, business banking officer at NBT Bank, also says uncertainty remains one of the defining challenges facing small businesses today.

“Small business owners are navigating an environment that often feels like a moving target,” Miller said. “Persistent cost pressures, including rising prices for inventory, materials, fuel, utilities and insurance, are squeezing margins and making it difficult to adjust pricing without impacting demand. Labor remains another major hurdle, with many businesses struggling to attract qualified workers and facing continued wage pressure when they do hire.”

Additionally, he notes that higher interest rates compared to the past decade are also impacting borrowing decisions and long-term planning.

“At the same time, shifting consumer spending patterns are making it harder to forecast revenue with confidence,” Miller said. “Many business owners are weighing critical decisions about hiring, expansion and capital investments without clear signals on timing.”

At NBT Bank, Miller says helping clients navigate those challenges starts with building strong relationships and maintaining ongoing communication.

“At NBT Bank, our relationship-focused approach has become more important than ever,” he said. “Those discussions often extend beyond lending to include cash flow, planning and long-term growth strategies.”

Miller says the businesses that continue to perform well are those that remain disciplined and adaptable.

“Small businesses that remain resilient tend to take a proactive, disciplined approach to managing their finances and operations,” he said. “They closely monitor cash flow and use tools like treasury services and lines of credit to improve liquidity and access funds more efficiently.”

Looking ahead to the second half of 2026, Miller encourages business owners to focus on planning rather than reacting.

“Be proactive and base your decisions on clear financial insight, not headlines,”

Caurie Putnam is a Rochester-area freelance writer.