A protester with the Main Street Alliance holds a sign outside the U.S. Supreme Court, as its justices are set to hear oral arguments on President Donald Trump’s bid to preserve sweeping tariffs after lower courts ruled that Trump overstepped his authority, in Washington, Nov. 5, 2025.
Nathan Howard | Reuters
Some small businesses that have to pay the bill for President Trump’s new tariffs are taking on high-interest rate merchant cash loans and other forms of debt to cover that added cost.
And several business owners who have taken on that costly debt told CNBC they fear financial disaster because of it.
Companies that spoke with CNBC reported being offered predatory lending interest rates north of 30% to cover their tariff-related costs.
Those people say that their companies could be left in a deep financial hole even if the Supreme Court upholds lower federal court rulings that the new tariffs are illegal and orders the federal government to refund companies the duties they have already paid.
U.S. Customs and Border Protection earlier this week said it has collected more than $200 billion in tariffs this year as a result of new duties imposed by Trump.
Some of the lending being done is merchant cash loans and revenue purchase agreements, which are not regulated by the Federal Deposit Insurance Corporation and do not have to abide by federal lending standards.
The FDIC, which has a supervisory policy on predatory lending, declined to comment. The Consumer Financial Protection Bureau, which the Trump administration has been trying to dismantle, did not respond to CNBC’s request for comment.
Josh Esnard, CEO of The Cut Buddy, a shaving products company, said that he receives multiple calls each day from high-interest rate lenders.
“They are very aggressive and deceptive in their practices in reaching out both by phone and email,” Esnar told CNBC.
Esnard said even if the Supreme Court rules the tariffs are illegal and his company is issued a refund, the money will not make Cut Buddy whole.
Esnard originally used three different lenders to pay his tariffs, with interest rates on his merchant cash loans falling between 24% and 30%. CNBC reviewed those agreements.
To be considered for the loans, Esnard paid underwriting origination fees totaling $30,000, which was in addition to the loans themselves.
Esnard borrowed a total of $950,000 in the three loans to pay for tariffs totaling $800,000.
“I needed to have a cushion of $150,000 for my payroll and overhead until I received payment from retailers and clients for my product,” Esnard said.
“It is going to take us five years to repay this loan, so it’s still a loss.”
In one agreement, Esnard obtained a $250,000 loan, but he owes $325,000 because of the fees.
“I need to pay them back weekly,” he said, citing the agreement.
Esnard recently received a financial lifeline to help stop his high-interest payments through a loan from The Business Consortium Fund, which focuses on minority-owned and small businesses.
The fund reviewed his high-rate loans and approved a new loan to fold in those payments for Esnard.
“Instead of paying a weekly payment of $35,000, I will now be paying $35,000 a month,” Esnard said.
“Yes, it’s still high, but it is better than the predatory lender payments,” he said.
“This saved my business from shutting down. We were literally talking to business brokers about selling the business.”
The Cut Buddy, which appeared on the television show “Shark Tank” in 2017, sells products online and in big box retailers such as Walmart, Target and CVS.
Esnard said, “2025 was going to be my highest revenue and net income year.”
“Not anymore, the tariffs have killed it,” he said.
Joann Cartiglia, owner of Queen’s Treasures, a Ticonderoga, New York-based toy company that designs and creates historically inspired, made-by-hand doll furniture, said that she has had to take on loans that have altered her business exit strategy.
“We were planning to retire in two years,” said the 64-year-old Cartiglia.
“My husband and I have invested a lot of our retirement money into this business, and now I have absolutely no hope of retirement,” she said.
Her company, which specializes in “Little House on the Prairie” dolls, furnishings and clothing, was excited when the year began with the announcement of a relaunch of that television series, which was popular in the 1970s and 1980s.
But Queen’s Treasures had to raise prices on its “Little House” character Laura Ingalls doll and other items because of the new tariffs.
Limited quantity is also an issue across its product lineup, and sales are down 33% because of the lack of inventory.
“I have loans now to cover my business expenses,” Cartiglia said. “My credit score is now down, and banks are not even looking at me because of this lower credit rating. I am forced to borrow where I can.”
She described the loans that her business is paying as “Mafia rates.”
“It is obscenely high, at over 20%,” Cartiglia said. “It is very difficult to see lenders making record profits from a bad situation.
“This was going to be a year of development. Now it’s not.”
Even if the Supreme Court rules the tariffs are illegal, she says it will not fix her company’s cash-flow problems.
“We are 100% in the hole because of the combination of a decrease in orders to make a profit and business operations,” Cartiglia said.
“The money we paid in the tariffs should have gone to business operations and building out inventory for the holidays,” she said.
“I honestly feel the government is putting me out of business. The tariffs are anti-American Dream.”
Utah-based Village Lighting Co. said that its bill for tariffs on imports in the 100 shipping containers it ordered this year is approaching $1 million.
“About 50% of our sales are fixed based on agreements made with our customers, so we have sold a lot of those goods to them directly at a loss,” said Jared Hendricks, co-owner of Village Lighting, which has been in operation for 23 years.
The company places holiday orders a year in advance, which means it had not factored in the costs of Trump’s new tariffs, most of which were announced only in April.
“We’ve kind of transitioned from working for profits to working for tariffs,” Hendricks said.
“We are just in business to pay off our tariff debt, and then we will look ahead next year.”
Although his company was able to secure a loan with their bank to cover tariffs and operational costs, the company had to raise prices, and has seen a sales decline since.
“The modest price increases led to significant declines in sales, forcing us to discount products simply to move inventory,” Hendricks said.
“At this point, it has become increasingly difficult to recover the tariff costs through normal product sales.”
Hendricks also said that potential refunds from a Supreme Court ruling will not be a silver bullet for suffering businesses.
“This experience demonstrates that the tariffs are not sustainable,” he said. “Consumers cannot absorb those higher prices, and the burden shifts entirely to the importer. This dynamic threatens the survival of businesses like ours.”
