I run a small business. Not a metaphor — a law firm, with payroll to make, a card processor taking its cut of every payment, and the same insurance renewals landing on my desk that land on yours. So let me write this one from inside the problem, with the government's own data.
The good news is real
Minnesotans filed 73,307 business applications in 2025 — the highest in the Census Bureau's series — after 69,283 in 2023 and 67,708 in 2024, against 46,284 in 2019. Through July, 2026 is running about 8 percent ahead of last year's record pace. Whatever else is true, the impulse to build something is alive here.
And those businesses carry the state. Per the U.S. Small Business Administration's Minnesota profile: 547,493 small businesses — 99.5 percent of all Minnesota businesses — employing 1.2 million people, 45.4 percent of the state's workforce. In the most recent measured year, small businesses generated a net 44,328 jobs: 88.7 percent of all net job growth in Minnesota. Women own 42 percent of Minnesota businesses; veterans own 5.6 percent. And 86 percent of the state's identified goods exporters are small firms.
One honest caveat inside the good news: the subset of applications most likely to become employer businesses — the ones that hire — has been flat since 2023, at roughly 22,000 a year. Plenty of people are starting something; fewer are starting something that grows.
The cost stack
Swipe fees. Every card transaction takes a cut before you see a dollar. Merchants nationally paid an estimated $198 billion in card swipe fees in 2025, at an average credit-card rate of 2.36 percent — figures from the merchant-side Merchants Payments Coalition, so weigh the source, but the mechanism isn't disputed. After a judge rejected an earlier $30 billion settlement as inadequate, Visa and Mastercard reached a revised deal valued near $38 billion in November 2025: posted credit interchange cut 10 basis points for five years, standard consumer-card rates capped at 1.25 percent for eight years, and new rights for merchants to decline high-cost cards. It won preliminary approval in June 2026 and final approval is still pending — over objections from the National Restaurant Association, convenience stores, Walmart, and others who argue the deal locks in the very fees it purports to settle. Minnesota's hospitality industry has a sharper local complaint: swipe fees are charged on the tax and tip portions of the bill, which means restaurants pay a processor a percentage of the sales tax they collect for the state.
The new payroll mandates. Minnesota Paid Leave took effect January 1, 2026, at a premium of 0.88 percent of wages (0.66 percent for employers under 31 employees), with employers covering at least half and a maximum 2026 employer contribution of $1,628 per employee. Earned Sick and Safe Time, in effect since 2024, accrues an hour per 30 worked, up to 48 hours a year.
Both sides deserve their actual arguments. The state's case: for large employers that already offered paid leave, moving to the state plan often saves money, and for small employers it makes a benefit affordable that otherwise wouldn't be — and by mid-2026 the program had surpassed its own participation projections, which is either evidence of real need or of cost pressure, depending on where you sit. The employers' case: the Minnesota Chamber surveyed nearly 700 business leaders in March 2026 and found the program "confusing to navigate, slow in execution and unclear in certain areas," with particular pain for seasonal and multi-state workforces; the Chamber asks for administrative fixes and small-business provisions rather than repeal. Both of those can be true, and the honest position is that a program this large should be judged on execution and audited for fraud like any other — which is exactly the standard this site applies to every program.
Downtown. The Twin Cities office market is the backdrop for thousands of small businesses that sell lunch, coffee, haircuts, and dry cleaning to office workers. Minneapolis CBD office vacancy is 32.1 percent; St. Paul's is 33.3 percent — roughly one in three square feet empty. The distress is visible in the sale prices: St. Paul's Great Northern Building, 672,806 square feet, sold for $1.9 million — about $3 a square foot. Target paid $110 million just to terminate its City Center lease. There is a genuine turn in the data — metro vacancy is down 120 basis points year over year, and second-quarter absorption was the strongest since 2019, partly because obsolete buildings are being converted rather than re-leased. But as the property-tax article in this series documented, those collapsing commercial values don't disappear; they shift the levy onto homeowners.
What we can do
Stop taxing the tax. Swipe fees charged on the sales tax and the tip are the purest example of a cost that exists because nobody with standing has fought it. Several states have taken this up; Minnesota should, and the state's own interest is obvious — it is currently paying card networks a percentage to collect its own revenue.
Fix the mandate, don't relitigate it. Paid leave is law and by all accounts in demand. The productive fight now is over administration: plain-language guidance, faster determinations, a genuine small-employer track, and hard anti-fraud controls from day one. A program that hemorrhages money to fraud loses the political support of the very workers it serves — this state has learned that lesson at a cost of hundreds of millions.
Make permitting a service, not an obstacle course. Pennsylvania cut corporate license processing from eight weeks to two days and refunds fees when it misses its own deadlines. That is a governing choice available to Minnesota tomorrow, and it costs a rounding error.
And treat downtown as a conversion problem. The vacancy numbers say the office era isn't coming all the way back. Every square foot converted to housing is a homeowner's tax bill stabilized and a small business's customer moved within walking distance.
Seventy-three thousand Minnesotans bet on themselves last year. The state's job isn't to run their businesses. It's to keep the deck from being stacked — on fees, on paperwork, on the fine print nobody reads — and then get out of the way.
Sources
Census Bureau Business Formation Statistics for Minnesota via FRED (series BABATOTALSAMN and BAHBATOTALSAMN; annual sums computed from monthly seasonally adjusted data through July 2026); U.S. Small Business Administration Office of Advocacy, 2024 Small Business Profile: Minnesota (firm counts, employment share, net job growth from BLS Business Employment Dynamics, ownership demographics, exporter data); Merchants Payments Coalition statements on 2025 swipe-fee totals and the settlement (merchant-side advocacy, attributed); CNBC (Nov. 10, 2025) and Payments Dive on the revised Visa/Mastercard settlement terms, objectors, and Judge Cogan's preliminary approval (June 9, 2026); Electronic Payments Coalition's contrary characterization; Hospitality Minnesota, 2026 State of Hospitality Report (swipe fees on tax and tip; wholesale price pressure); Minnesota Paid Leave (DEED) premium-rate and small-employer pages and the state's own case for the program; PayrollOrg and League of Minnesota Cities on 2026 contribution mechanics; Minnesota Chamber of Commerce survey of nearly 700 employers (March 2026) and president Doug Loon's comments; Star Tribune (Apr. 20 and July 7, 2026) on higher-than-projected uptake, cited at headline level; MPR News (Mar. 21, 2026) for balanced coverage; MN Department of Labor and Industry on Earned Sick and Safe Time; Cushman & Wakefield Minneapolis Office MarketBeat, Q2 2026 (vacancy, rents, absorption, distressed sales); Star Tribune (Feb. 26, 2026) on the Target lease termination; Pennsylvania permitting results as documented in state program reporting.
Advocacy-affiliated figures are labeled; employer and state arguments about paid leave are quoted from their own materials. Corrections: campaign@madgettformn.com.