Since becoming widely commercially available in fall 2022, adoption of generative artificial intelligence in U.S. businesses has grown rapidly. Recent surveys suggest substantial year-over-year increases between 2023 and 2024 (growth estimates range from 38% to 78%), indicating that 20% to 40% of businesses had adopted artificial intelligence (AI) tools (whether traditional or generative) as of 2024.1
Although these surveys suggest that larger businesses are more likely to have adopted AI, it is not just larger businesses testing the AI waters. Data from the Federal Reserve’s 2024 Small Business Credit Survey (SBCS)—the first time the SBCS has asked about AI use—sheds light on the experiences of small businesses exploring AI adoption. According to our analysis of the 2024 SBCS data, nearly 40% of the small businesses (both employers and sole proprietors) that responded to a question on this topic were already using or planning to use AI in the near future.
Among small businesses already using or experimenting with AI, respondents indicated a range of experiences:
- Small businesses reported using AI for a wide array of business processes, from individual productivity improvements to content creation to business advice and planning: “I use AI every day in my business… for demographic research, content creation, writing emails, applying for grants, social media, time management, marketing campaigns, product research, team building, creating new programs like loyalty and membership programs, breaking down finances and cash flows, finding our cost per hour and breaking down pricing strategies, and more.”
- The types of AI tools used varied. Examples include:
- AI functionality that was embedded in existing software (e.g., “It is embedded in the billing software our company uses”).
- Well-known and often freely available platforms (e.g., “[We’re] currently using free versions [of] ChatGPT and Google Gemini for proofreading content / blog and social media posts”).
- Specialized programs for specific industries or business use cases (e.g., “We use a software that uses AI to track caregiver visits to clients homes”).
- Though many small businesses said they were in the early stages of AI adoption, a subset of AI-sophisticated small business owners had built custom AI models or were embedding AI in products they sold: “[W]e currently use it in our day to day work and we develop software and tools that use AI for our client needs.”
Although overall AI adoption is significant among small businesses, comfort with and understanding of AI, sentiment toward AI, and complexity of its application varies widely. We heard a mix of perspectives from business owners who had not yet adopted AI:
- Concerns about AI, such as confidentiality or accuracy, have prevented some from adopting it. One respondent wrote,“We have not found a way to integrate AI into our business while keeping the business’s intellectual property safe.”
- Some are interested in using AI but don’t know enough to implement it or to identify use cases within their businesses, with one small business saying, “No [I do not use or plan to use AI]. I don’t know how, and there is nobody to teach me.”
- For others, they say AI will never have a place in their business, whether due to perceived inapplicability or philosophical objections. One respondent noted, “AI will never replace a human being.” Another said, “I hope not. We make cheeseburgers.”
It’s too soon to pin down the effects of AI on employment and productivity in small businesses as a whole, particularly given substantial variation in adoption, as well as broader economic changes and challenges. But it is clear that small businesses are using AI, and discussions with stakeholders suggest uptake is growing. We are continuing to watch this important space as it evolves. Stay tuned for a more in-depth analysis of qualitative results from 2024, and an analysis of additional AI-focused questions from the 2025 SBCS.
This article is part of a Community Investments series exploring the ways in which the growing prevalence of artificial intelligence may be impacting economic conditions, especially in low- and moderate-income communities and among community development stakeholders. Gaining greater insight into emerging economic trends through community engagement and analysis—including better understanding the economic experiences of lower-income workers and consumers—contributes to the Federal Reserve Bank of San Francisco’s work to support monetary policy, strengthen financial institutions, and enhance the payments systems.
End Notes
1. Leland Crane, Michael Green, and Paul Soto, “Measuring AI Uptake in the Workplace,” February 5, 2025. FEDS Notes. Board of Governors of the Federal Reserve System. https://www.federalreserve.gov/econres/notes/feds-notes/measuring-ai-uptake-in-the-workplace-20240205.html