A Main Street Alliance participant holds a sign outside the U.S. Supreme Court as U.S. Supreme Court justices are scheduled to hear oral arguments on President Donald Trump’s efforts to maintain significant tariffs after a lower court ruled that the president overstepped his authority, Nov. 5, 2025, in Washington.
Nathan Howard | Reuters
Some small businesses that have to pay the bills for President Trump’s new tariffs are taking on high-interest merchant cash loans and other forms of debt to cover the additional costs.
And several business owners who took on that high debt told CNBC that they feared it would lead to financial ruin.
Companies that spoke to CNBC reported being offered predatory loan interest rates of more than 30% to cover tariff-related costs.
They argue that even if the Supreme Court upholds a lower federal court’s ruling that the new tariffs are illegal and orders the federal government to refund the tariffs companies have already paid, their companies could be in a deep financial hole.
U.S. Customs and Border Protection announced earlier this week that it has collected more than $200 billion in duties this year as a result of new tariffs imposed by President Trump.
Some of the loans made are merchant cash loans and revenue purchase agreements, which are not regulated by the Federal Deposit Insurance Corporation and are not required to comply with federal lending standards.
The FDIC, which sets oversight policies for predatory lending, declined to comment. The Consumer Financial Protection Bureau, which the Trump administration is seeking to dismantle, did not respond to CNBC’s request for comment.
Josh Esnard, CEO of shaving products company The Cut Buddy, said he receives multiple calls every day from high-interest lenders.
“They have a very aggressive and deceptive manner in communicating with us both by phone and email,” Essner told CNBC.
Esnard said even if the Supreme Court rules that the tariffs are illegal and his company is reimbursed, the money won’t make Cut Buddy whole.
Esnard initially used three different lenders to pay its customs duties, with commercial cash loans offering interest rates between 24% and 30%. CNBC reviewed those agreements.
To qualify for the loan, Esnard paid an underwriting origination fee totaling $30,000 in addition to the loan itself.
Esnard borrowed a total of $950,000 in three loans to pay a total of $800,000 in duties.
“We needed a $150,000 cushion in payroll and overhead until we received payment for our products from retailers and customers,” Esnard said.
“It will take five years to repay this loan, so we are still in the red.”
In one deal, Esnard received a $250,000 loan but owed $325,000 in fees.
“You have to pay it back every week,” he said, citing the terms of the agreement.
Esnard recently received a financial lifeline to end high interest payments through a loan from the Business Consortium Fund, which focuses on minority shareholders and small and medium-sized enterprises.
The fund reviewed his high-interest loans and approved new loans to be rolled into payments to Esnard.
“Instead of paying $35,000 every week, you’re now paying $35,000 every month,” Esnard said.
“Yes, it’s still expensive, but it’s better than what predatory lenders pay,” he said.
“This saved my business from closing. We were literally talking to our business broker about selling the business.”
Cut Buddy, who appeared on the TV show “Shark Tank” in 2017, sells its products online and at major retailers. walmart, target and CVS.
“2025 will be my best year of revenue and net income,” Esnard said.
“It’s gone. Tariffs killed it,” he said.
Joanne Cartiglia, owner of Queen’s Treasures, a Ticonderoga, N.Y.-based toy company that designs and makes historically-inspired handmade doll furniture, said she had to take out a loan that changed her exit strategy.
“We were going to retire in two years,” said Cartiglia, 64.
“My husband and I have invested a lot of our retirement money into this business, and now we have no desire to retire,” she said.
Her company, which specializes in “Little House on the Prairie” dolls, furniture and clothing, was excited to start the year with the announcement of a rerun of the popular 1970s and 1980s TV series.
But Queen’s Treasures has had to raise prices on “Little House” character Laura Ingalls dolls and other products because of the new tariffs.
Limited quantities across the product lineup have also been an issue, with sales decreasing by 33% due to inventory shortages.
“I currently have a loan to cover business expenses,” Cartiglia said. “My credit score is currently declining and banks don’t even pay attention to me because of this low credit rating. I’m forced to borrow where I can.”
She described the loans her business was paying as “mafia interest rates.”
“The percentage is over 20%, which is very high,” Cartiglia said. “It is very difficult for lenders to make record profits from a bad situation.
“This year was supposed to be a year of development, but now it’s not.”
Even if the Supreme Court rules that the tariffs are illegal, she says, it won’t solve the company’s cash flow problems.
“The combination of profitable orders and reduced business operations has left us 100% on the ropes,” Cartiglia said.
“The money we paid in customs duties should have been used to run our business and stock up for the holiday season,” she said.
“Honestly, I feel like the government is putting me out of business. Tariffs are anti-American Dream.”
Utah-based Village Lighting Company announced that its customs bill for 100 shipping container imports it ordered this year is approaching $1 million.
“About 50 percent of our sales are locked in to customer contracts, so we’ve been selling a lot of our products directly to customers at a loss,” said Jared Hendricks, co-owner of Village Lighting, a 23-year-old company.
The company placed its holiday orders a year in advance, meaning it didn’t factor in the cost of President Trump’s new tariffs, most of which were only announced in April.
“We’ve kind of transitioned from working for profits to working for tariffs,” Hendricks said.
“We’re just doing business to pay off our customs debt and then we’ll look to next year.”
Although his company was able to secure a loan from a bank to cover customs duties and operating costs, it had to raise prices and sales have since declined.
“Small price increases led to a significant drop in sales and we were forced to discount products just to move inventory,” Hendricks said.
“At this time, it is becoming increasingly difficult to recover tariff costs through normal product sales.”
Hendricks also said the possibility of refunds from the Supreme Court’s ruling is not a silver bullet for struggling businesses.
“This experience shows that tariffs are not sustainable,” he said. “Consumers cannot absorb these higher prices, and the burden shifts entirely to importers. This dynamic threatens the survival of companies like ours.”
