In this blog post, we look at economic predictions for 2026 and offer seven tips to help small businesses prepare for the year ahead. 

At AR Funding, our B2B business clients rely on us to help them weather the tough times and accelerate growth during the good times. At the end of each year, we honor that commitment by looking at the challenges on the horizon so that we can help our clients plan in advance. 

A look at the year ahead for small business

Last year, we highlighted a few predictions that came to pass, including a softening of the job market and consumer spending. A year later, leading economists are predicting more of the same in 2026, with some coining the term “snagflation” to describe the muted effects of mild inflation combined with a softer labor market. While this economic outlook is by no means catastrophic, it could have a dampening effect on growth for some businesses. 

And even a mild downturn is likely to hit smaller businesses harder. Compared to enterprises with greater capital reserves in place, small businesses tend to have less of a buffer available. Because of this, they need to seek creative ways of insulating themselves from the potential impacts of interest rate fluctuation, rising material costs, and sales slowdowns. 

Economists are far from pessimistic about 2026. In fact, most are predicting moderate economic growth. In particular, industries such as manufacturing (especially in high-tech) and staffing are expected to see growth after a challenging year in 2025. Even the transportation industry, which has struggled significantly in previous years, is forecast to see a modest recovery. 

Resilience-building tips for a strong 2026

Last year, we shared four best practices for building financial resilience, and these practices will continue to be relevant to businesses as they prepare for 2026. 

1. Know your customers. With bankruptcy filings on the rise, it’s more important than ever to know as much as possible about your customers’ financial risk profile and actively manage customer credit.
2. Know your vendors. A bad vendor can impact your supply chain, reputation, and revenue, so these relationships require careful oversight, too. 
3. Improve your credit score. The ability to access credit when needed is essential to business survival. Make sure you’re doing everything you can to boost your creditworthiness. 
4. Build financial flexibility. Educate yourself about the pros and cons of the many different types of access to capital, including alternative financing options.  

This year, we are adding three more best practices to help businesses achieve even greater resilience. 

1. Know your asset-based lending options. Businesses have steadily increased their reliance on borrowing to secure the cash they need to stabilize and grow. By knowing what options you have to leverage your business assets, you can add another valuable tool to your financial toolkit.  
2. Eliminate your reliance on MCAs. Merchant cash advances (MCAs) were in the news a lot this year for predatory lending practices, and some of our clients were nearly wiped out by them. Before you consider an MCA, know what you’re getting into, and if you’re already caught up in an MCA, take steps to close it down. 
3. Use your networks to fuel growth. With markets softening, it’s more important than ever to strengthen your existing connections and create new ones that could lead to new business. Our own expert networker, Courtney Moore, shared her tips for generating new business through networking earlier this year. 

Healthy cash flow helps fuel growth

This was a “wait and see” year for many of our clients, with the majority impacted to some degree by tariff uncertainty and tighter borrowing requirements. While few economists are predicting a boom in 2026, many are cautiously optimistic. That means there will be opportunities for growth for companies that are able to build up cash reserves to tide them over during challenging moments or to mobilize quickly when growth opportunities present themselves. 

Access to working capital will be critical to success, and we look forward to supporting the business community by helping them unlock it through invoice factoring. 

To find out how to add factoring to your financial toolkit in 2026, contact us.