The Federal Reserve’s recent 25 basis point rate cut has sparked debate on whether it will meaningfully boost growth. For small businesses—the backbone of the U.S. economy—the stakes couldn’t be higher.

Dan Varroney, CEO of Potomac Core Consulting and author of the forthcoming book Rethinking Economic Growth: How Small Businesses Can Help Consistently Grow the Economy, has been featured on MarketWatch, FOX Seattle, and RealClearPolitics for his insights on this issue. He makes one thing clear: policymakers must understand just how central small firms are to America’s economic engine.

“Small businesses stand at the center of this story,” Varroney explains. “They employ 61.6 million Americans, nearly half of the workforce, and create two out of every three new private-sector jobs. They are the first to feel the pinch when capital costs rise, because unlike large corporations, they cannot tap bond markets or float stock.”

Why Rates Matter for Entrepreneurs

For small businesses, borrowing is lifeblood. “Their growth depends on bank loans and credit lines, both of which have more than doubled in cost,” says Varroney. “For many entrepreneurs, interest rates have risen significantly. That’s the difference between hiring a new worker and holding back, between opening a new location and shutting down expansion plans altogether.”

High rates don’t just squeeze business owners—they ripple through the broader economy. Varroney points out: “High rates are also crushing homebuilding, driving up housing costs, and sapping consumer confidence. This matters for small firms, which depend on strong local economies and healthy consumer demand. When households feel squeezed, they spend less in restaurants, retail shops, and service businesses. The pain surges outward, slowing hiring and shrinking opportunity.”

The Economic Backbone

The scale of small business impact is hard to ignore:

• Nearly 44% of U.S. GDP comes from small businesses.
• More than 97% of exporters are small firms.
• They anchor local communities as retailers, builders, service providers, and manufacturers.

“When small businesses thrive, America thrives. When they stall, the consequences ripple across the entire economy,” Varroney notes.

Beyond Interest Rates

While the Fed’s latest move was welcomed, Varroney stresses the issue goes deeper. “The Fed’s decision isn’t just about interest rates, it’s about jobs, growth, and the American Dream. To avoid a prolonged slowdown and create an economy that consistently grows at 3% or better, we must empower small businesses. That starts with decisive action on rates.”

Importantly, entrepreneurs aren’t asking for handouts. “Small businesses don’t want bailouts or special favors. They want the chance to compete, to borrow at fair rates, and to hire. They want policymakers to understand that they are not just another sector, they are the key to sustainable economic growth,” Varroney emphasizes.

The Path Forward

With consumer confidence fragile and borrowing still expensive, small business owners remain cautious about expansion. But Varroney argues that decisive monetary policy—paired with a renewed focus on small business vitality—could unlock the next wave of U.S. growth.

His message is simple: “To grow the economy at 3% or more, America must prioritize small businesses. They are not just another piece of the puzzle—they are the puzzle.”

As he prepares to release Rethinking Economic Growth: How Small Businesses Can Help Consistently Grow the Economy, Dan Varroney continues to be a trusted source for national outlets like CNBC and LiveNOW from Fox. His call to action for policymakers is clear: empower small businesses, and America’s growth story will follow.