AI Adoption Among Small Businesses: Qualitative Insights from the Small Business Credit Survey

Executive Summary

Nearly 40% of small business respondents to the 2024 Small Business Credit Survey (SBCS) reported either using or planning to use artificial intelligence (AI), revealing a rapidly evolving landscape of adoption among the nation's smaller firms.

Sentiments around AI adoption ranged from enthusiasm to opposition. Reported applications of AI among small business respondents were just as varied, spanning both core operations and support functions. Common applications included:

• productivity tasks
• marketing, social media, and search engine optimization
• developing written communications
• visuals generation and graphic design
• customer service
• analytics and forecasting
• programming machines and sensors
• developing custom AI tools for specific business needs

The sophistication of these applications varied considerably, from basic task assistance to complex, integrated systems.

Many firms expressed interest in AI adoption but reported facing barriers, including policy and regulatory limitations, financial costs associated with appropriate tools, time and capacity constraints related to staff training and system upgrades, and knowledge gaps regarding implementation strategies. Other firms deliberately opted not to adopt AI, citing concerns about accuracy and intellectual property rights, the centrality of human interaction to their business model, or an absence of perceived applicability to their operations.

These findings from the 2024 SBCS's initial qualitative inquiry into AI adoption establish a baseline understanding of how small businesses are experiencing this technological transformation and complement forthcoming analysis of the 2025 SBCS, which included a comprehensive supplemental survey module on AI adoption.

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The views expressed in this report are those of the authors and do not necessarily reflect the views of the Federal Reserve Bank of San Francisco or the Federal Reserve System.