A Main Street Alliance protester holds a sign in front of the U.S. Supreme Court, during which justices will hear oral arguments on President Donald Trump’s attempt to uphold sweeping tariffs after lower courts ruled that Trump overstepped his authority, in Washington, Nov. 5, 2025.
Nathan Howard | Reuters
Some small businesses left footing the bill for President Trump’s new tariffs are taking out high-interest merchant cash advances and other forms of debt to cover these additional costs.
And several business owners who have taken on this costly debt told CNBC they fear financial disaster as a result.
Companies that spoke to CNBC reported being offered unfavorable loan interest rates of over 30% to cover their plan-related costs.
These people say their companies could be in a deep financial hole even if the Supreme Court upholds lower federal courts’ rulings that the new tariffs are illegal and orders the federal government to refund companies for tariffs they have already paid.
U.S. Customs and Border Protection announced earlier this week that it had collected more than $200 billion in tariffs this year as a result of new tariffs imposed by Trump.
Some of the lending involves merchant cash advances and revenue purchase agreements, which are not regulated by the Federal Deposit Insurance Corporation and are not required to adhere to federal lending standards.
The FDIC, which has a regulatory policy on predatory lending, declined to comment. The Consumer Financial Protection Bureau, which the Trump administration is trying to dismantle, did not respond to CNBC’s request for comment.
Josh Esnard, CEO of The Cut Buddy, a shaving products company, said he receives several calls every day from lenders offering high interest rates.
“They are very aggressive and deceptive when it comes to contacting both by phone and email,” Esnar told CNBC.
Esnard said even if the Supreme Court finds the tariffs illegal and his company gets a refund, the money won’t cure Cut Buddy.
Esnard originally used three different lenders to pay its rates, with interest rates on its merchant loans ranging from 24% to 30%. CNBC reviewed these agreements.
To be considered for the loans, Esnard paid underwriting fees totaling $30,000 in addition to the loans themselves.
Esnard borrowed a total of $950,000 in the three loans to pay duties totaling $800,000.
“I needed a $150,000 cushion for my labor and overhead costs until I received payment from retailers and customers for my product,” Esnard said.
“It will take us five years to pay off this loan, so it’s still a loss.”
In an agreement, Esnard received a $250,000 loan but owes $325,000 due to fees.
“I have to pay them back weekly,” he said, citing the agreement.
Esnard recently received a financial lifeline to stop his high interest payments through a loan from the Business Consortium Fund, which focuses on minority and small businesses.
The fund reviewed its high-interest loans and approved a new loan to deposit those payments for Esnard.
“Instead of a weekly payment of $35,000, I now pay $35,000 a month,” Esnard said.
“Yes, it’s still high, but it’s better than the predatory payments from lenders,” he said.
“It saved my business from closing. We literally talked to business brokers about selling the business.”
The Cut Buddy, who appeared on the television show “Shark Tank” in 2017, sells products online and at major retailers such as Walmart, Goal And CVS.
Esnard said: “2025 would be my highest sales and net income year.”
“Not anymore, the tariffs have destroyed it,” he said.
Joann Cartiglia, owner of Queen’s Treasures, a Ticonderoga, New York-based toy company that designs and manufactures historically inspired, handcrafted doll furniture, said she had to take out loans that changed her business exit strategy.
“We had planned to retire in two years,” said Cantiglia, 64.
“My husband and I invested a lot of our retirement money in this company, and now I have absolutely no hope of retiring,” she said.
Her company, which specializes in “Little House on the Prairie” dolls, furniture and clothing, was excited when the year began with the announcement of a relaunch of the television series popular in the 1970s and 1980s.
However, the new tariffs forced Queen’s Treasures to increase prices on the Laura Ingalls Little House character doll and other items.
Limited quantities are also an issue across the product range and sales are down 33% due to a lack of stock.
“I now have loans to cover my business expenses,” Cantiglia said. “My credit score is now down and the banks don’t even care about me because of this lower credit score. I’m forced to take out loans wherever I can.”
She described the loans her company pays as “mafia interest.”
“At over 20%, it’s obscenely high,” Cantiglia said. “It is very hard to imagine lenders making record profits from a bad situation.”
“This was supposed to be a year of development. Now it’s not like that anymore.”
Even if the Supreme Court declares the tariffs illegal, it won’t solve her company’s cash flow problems, she says.
“We are 100% in trouble because of the combination of a decline in profitable orders and business operations collapsing,” Cantiglia said.
“The money we paid in tariffs should have gone toward business operations and stockpiling for the holidays,” she said.
“I honestly feel like the government is putting me out of business. The tariffs are an anti-American dream.”
Utah-based Village Lighting Co. said its bill for import duties on the 100 shipping containers it ordered this year is nearly $1 million.
“About 50% of our sales are based on agreements with our customers, so we sold a lot of that merchandise directly to them at a loss,” said Jared Hendricks, co-owner of Village Lighting, which has been in business for 23 years.
The company places holiday orders a year in advance, meaning it hasn’t factored in the cost of Trump’s new tariffs, most of which weren’t announced until April.
“We’ve kind of gone from working for profits to working for tariffs,” Hendricks said.
“We are only in business to pay off our customs debts and then we look ahead to next year.”
Although his company was able to take out a loan from his bank to cover customs duties and operating costs, the company had to increase prices and has seen a decline in sales ever since.
“The modest price increases resulted in significant sales declines and forced us to discount products just to move inventory,” Hendricks said.
“At this point, it is becoming increasingly difficult to cover the cost of tariffs through normal product sales.”
Hendricks also said potential refunds resulting from a Supreme Court ruling are not a panacea for distressed companies.
“This experience shows that tariffs are not sustainable,” he said. “Consumers cannot absorb these higher prices and the burden shifts entirely to the importer. This dynamic threatens the survival of companies like ours.”
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