Small firms lead mid-sized firms in profitability growth

Summary

• Small business profitability growth continued to outpace mid-sized business profitability growth in August 2026.
• Bank of America Institute's Business Checkpoint expanded its dataset to include firms with less than $50M in annual revenue, capturing mid-sized firms that generate more than twice the share of revenue of smaller firms.
• Profitability ratios for both small firms (under $5M) and mid-sized firms ($5M-$50M) were above their 2025 averages in August.
• Profitability growth among mid-sized businesses improved in recent months but remained below that of small firms.
• The recent outperformance by smaller firms suggests some acute headwinds facing them may be starting to ease.
• The report utilizes aggregated and anonymized Bank of America transaction data, including business payments, payroll payments, and AI-related spending, to inform macroeconomic views.
• Revenue tiers are determined by stated revenue on credit applications, actual account inflows, and third-party revenue estimations.
• The data is not adjusted for seasonality, processing days, or portfolio changes and may be subject to periodic revisions.