Small businesses face an AI adoption gap as larger firms pull ahead

New federal data shows AI use rising faster at larger companies than at many of the nation’s smallest businesses, raising concerns that Main Street could fall behind as AI becomes a core business tool. The gap matters because small firms make up nearly all U.S. businesses and a major share of jobs and GDP.

Why it matters: - Small businesses make up 99.9% of U.S. businesses, employ 62.3 million people, or 45.9% of private sector workers, and account for 43.5% of U.S. gross domestic product, according to the U.S. Small Business Administration Office of Advocacy. - As AI is used more for customer service, marketing, data analysis, administrative work, operations, and decision making, adoption could shape which businesses gain capacity and which struggle to keep up. - A widening AI gap could affect which companies win customers and contracts, which can grow, and which remain locally owned.

What happened: - U.S. Census Bureau data collected from December 2025 through May 2026 showed overall business AI use hovering between 17% and 20% during the period. - Thirty-seven percent of firms with at least 250 employees reported using AI in business operations. - AI use increased among firms with at least 20 employees. - AI use did not change significantly among businesses with fewer than 20 employees. - Natasha Broxton, founder and CEO of Select Auto Parts & Sales and founder of Alitura Group, said the real divide will be between companies that can turn AI into operating capacity and companies that cannot.

The details: - Broxton has spent more than a decade building and operating a Milwaukee automotive recycling company while using AI and automation inside its operations. - Broxton teaches business leaders how to apply AI to practical business problems. - Access to an AI tool is only the starting point for many small businesses. - Owners may have ChatGPT or another AI platform but still lack time to decide where AI fits inside the company, which processes should be improved first, how information should be organized, what should stay under human control, and how employees should use the technology. - Many small businesses do not have dedicated technology teams, data departments, automation specialists, or staff focused on experimenting with emerging technology. - The same owner may handle sales, hiring, finances, operations, customer issues, and strategy. - The core issue is access to the knowledge and capacity needed to put AI to work. - Federal Reserve analysis published in April 2026 also found a stronger association between AI adoption and firm size in recent business survey data. - Federal Reserve researchers said adoption patterns vary by firm size and industry. - The available data does not yet show whether AI gains will mainly go to larger firms or help smaller businesses compete more effectively.

Between the lines: - Larger companies may be better positioned to use AI to respond to customers faster, analyze information more efficiently, reduce repetitive administrative work, and make decisions with better access to internal data. - Smaller competitors that lack implementation capacity could face disadvantages that build over time. - Practical AI readiness is becoming an economic development issue, not just a technology issue. - Chambers of commerce, small business development organizations, industry associations, workforce programs, lenders, municipalities, and community organizations may need to add practical AI education to traditional support like capital access, marketing help, and workforce development. - Broxton argues the goal is not to turn every small business owner into a technology expert. - The goal is to help owners identify where technology can solve a real business problem. - Small businesses already generate customer conversations, emails, estimates, photos, inventory records, sales histories, service requests, schedules, documents, and years of institutional knowledge. - The challenge is turning that information into usable business intelligence without the resources of a large corporation.

What's next: - Organizations that support entrepreneurs may increasingly need to build AI education and implementation support into their services. - Broxton is offering interviews, keynote presentations, and executive workshops through AlituraGroup.com/speaking. - As AI becomes more embedded in everyday business systems, small businesses will need resources, education, and implementation support to benefit from it.

The bottom line: - The main risk for small businesses is not lack of access to AI tools. - The bigger risk is lacking the time, knowledge, and operational support to use AI well enough to compete.