Business Applications Up 3.7%, Cascading Healthcare Costs, AI Resource Credits

Hey everybody, it's Gene Marks, and welcome to this week's episode of the Paychex Thrive Week in Review. This is where we take a few items in the news that's impacting your small business and mine, and we talk about it a little bit.

Now, before we get started, here's a number that I keep coming back to; 300 to 400 hours a year. That's how much time AI can save a small business owner on admin work alone. But you have to know where to start, and that's exactly why I love this new webinar series from Paychex called “AI for Small Business: A Practical Guide.” It walks you through putting AI to work in your business.

There are five episodes, 30 minutes each, completely free. You can register at go.paychex.com/AIWebinarSeries. Again, that's go.paychex.com/AIWebinarSeries. We'll also include a link in the show notes.

All right, so let's get to the news, shall we? The first has to do with applications for new businesses. New business formations in the U.S. continue to show resilience despite economic uncertainty. According to the latest data from the U.S. Census Bureau, total business applications rose 3.7% in May, to 523,971 on a seasonally adjusted basis. While high-propensity applications – those are the ones that are most likely to become employer businesses – they edge down a little bit to about 147,000 in May. The broader trend, it remains healthy.

One chief economist, Raymond Keating for the SBE Council, said that business applications have remained at historically strong levels since the pandemic, reflecting continued entrepreneurial confidence and economic dynamism. The data suggests that Americans are still willing to launch new ventures despite higher borrowing costs and labor market challenges. For small business advocates, the sustained pace of business creation is a positive signal for future job growth, innovation, and local economic development.

Yeah, that's true. I mean, despite all that we hear about all the uncertainties and the problems and the issues and tariffs and inflation and labor shortages and blah blah blah, entrepreneurs are coming through the woodwork to set up new businesses, and that has been going on now since the pandemic.

The big reason why is because it has never been a better time in history to become an entrepreneur and a business owner. The technology is inexpensive, you can work from anywhere, you have incredible access to markets and potential customers, and although borrowing rates are still elevated, they're still manageable, and there's plenty of capital that's out there for those that need it and want to pay for it. So, it really is a good time to start a business. It's been a good time for the past five years, and a lot of U.S. entrepreneurs are taking advantage of it.

Just bear in mind for any of you people that are watching this or listening to this that run your own small business, you know it's not romantic, okay? There's a lot of issues when you do it, there's a lot of challenges that you have running a business. It can be harsh, it can be frustrating, it can be stressful. So, you just be aware. You don't just start up a new business because you think it's some idealistic thing to do. You really want to go into it with eyes wide open, a good business plan, plenty of capital – at least a year's worth of capital – and also a lot of support from your family, as well, because it's going to take up a lot of time.

But good news is more than a half a million new business applications were filed in May alone.

All right, to our next news, this is not good news. It has to do with healthcare costs. This was reported in HRDive. And the report is that nearly half of large employers are planning to raise their workers' healthcare costs. Large employers are increasingly shifting these healthcare costs to workers as medical expenses continue to climb.

This is based on a new survey from Mercer, which found that nearly half of large employers expect employees to pay more for health coverage in 2027 through higher premiums, deductibles, and other cost-sharing measures. The move comes as employer-sponsored healthcare costs are projected to rise at the fastest pace in 15 years, driven by higher utilization of healthcare services, specialty drug spending, and inflationary pressures across the healthcare system.

Despite these increases, employers remain reluctant to eliminate core benefits that workers now consider to be standard. Many organizations are, instead, exploring alternative plan designs, tighter pharmacy management, and targeted cost containment strategies. The findings highlight the growing affordability challenge facing both employers and employees as healthcare expenses continue to outpace wage growth.

You know, you talk about the issues that's facing all of us as business owners. Yes, inflation, labor shortages, you know, again, demand, all that kind of thing. Healthcare is rising to the top of big issues that are facing employers, both big and small, not only this year, but looking into next year, as well.

If you're a small business, it's tough to compete against these larger employers. And yeah, you might have to do what they're doing and have more of your employees' share in healthcare costs, but I would also encourage you to consider some other strategies, as well.

Healthcare reimbursement arrangements are a great way to help control your healthcare costs that you're spending on your employees.

Health savings accounts are a very affordable option to provide so employees can take some of their pre-tax money and pay it for unreimbursed medical expenses. And forging partnerships with other businesses, local urgent care centers, even local independent pharmacies might be able to cut costs for both you and your employees.

There are a bunch of things that you can be doing to try and navigate your way around this increased cost environment for healthcare. That's what some of my clients are doing right now. You need to be thinking about that, talking with your advisors, particularly your benefits experts as well, because healthcare costs are going to continue to rise in 2027, and it's a benefit that every employee expects and needs to have. And even as a small business owner, you have to be ready to provide it. So, just be ready.

Next and finally is our AI news of the week. Turns out the Small Business Administration and Perplexity, the AI platform provider, have launched a $25 million Main Street AI accelerator. The U.S. Small Business Administration has partnered with the AI company Perplexity AI to launch this $25 million AI accelerator. It's a program designed to help small businesses adopt artificial intelligence tools.

Under this initiative, up to 100,000 SBA 7(a) and 504 loan recipients will receive $250 in Perplexity AI credits, giving them access to AI-powered research, analysis, and productivity tools.

Administration officials say the goal is to help small businesses compete more effectively, improve efficiency, and strengthen America's position in the global AI race. The program reflects a growing recognition that AI adoption is becoming increasingly important for smaller firms, not just larger enterprises. By lowering the cost of experimentation and implementation, the accelerator aims to bring advanced AI capabilities directly to Main Street businesses across the country.

So again, if you are getting an SBA loan, particularly a 7(a) or a 504 loan recipient, reach back out to the SBA and find out how you can take advantage of this $250 credit towards a Perplexity account. Perplexity is a very, very close competitor to Claude and ChatGPT and Copilot and Gemini and Grok. It is among the top AI platforms out there. And here the SBA is giving you free money to sign up and use perplexity so that you can really get on the ball using AI in your business. Should be a great head start. If you had any cost concerns before, this should help to allay some of those cost concerns at least over the next year or so.

You have been watching or listening to this week's episode of the Paychex Thrive Week in Review, and my name is Gene Marks.

A couple of things. Don't miss the “AI for Small business: A Practical Guide” webinar series. Go to go.paychex.com/AIWebinarSeries. Also, please subscribe and follow this podcast on YouTube and your favorite podcast provider. Also, if you would like more tips and advice and help in running your business, sign up for a Paychex Thrive newsletter. Go to paychex.com/thrive.

Again, my name is Gene Marks. Thanks for joining us. I'll be back with you next week with some more news that impacts your small business and mind, and we'll talk a little bit about that. See you then.

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