Small businesses in the U.S., burdened by Trump taxes, are increasingly turning to high-interest loans such as merchant cash loans—over 30%—to stay afloat, risking bankruptcy.
On December 18, 2025, at 6:15 AM, CNBC reported that a number of small businesses in the United States, burdened by the costs of President Donald Trump's new import tariffs, are turning to high-interest loans such as merchant cash loans and other forms of debt to pay off the taxes. Several business owners told CNBC that taking on this type of debt could lead to financial ruin because they are being offered exploitative loans with interest rates exceeding 30% to offset the sudden increase in customs duties.
These business owners also warned that even if the U.S. Supreme Court upholds the lower court's ruling and rules Trump's new taxes illegal, ordering the government to refund taxes already paid, the debt and interest incurred along the way could leave businesses financially stranded. The U.S. Customs and Border Protection (CBP) revealed that this year the government collected more than $200,000 billion in customs revenue from these new taxes.
Sources of funding that many small businesses rely on include merchant cash loans and revenue purchase agreements, which are not regulated by the Federal Deposit Insurance Corporation (FDIC) and do not need to meet federal lending standards.
Josh Esnard, CEO of The Cut Buddy, a shaving product company, revealed that he receives calls from high-interest lenders multiple times a day and considers these lenders to be aggressive and fraudulent in both phone calls and emails. Even after the Supreme Court ruled the taxes invalid and the company received a refund, Esnard acknowledged that the money could not truly restore the company's financial position due to the existing debt.
Asnard used three lenders to pay his taxes, with interest rates ranging from 24% to 30%, and also paid a total of $30,000 in loan processing fees. In addition to his primary loan, he borrowed a total of $950,000 to pay $800,000 in taxes, along with a $150,000 reserve for employee wages and operating expenses until he received payments from retailers and customers. This debt is expected to take five years to repay and will still result in an overall loss.
In one contract, Asnard borrowed $250,000 but had to repay $325,000 in fees and weekly installments. He later received assistance from The Business Consortium Fund, which provides loans to small and minority businesses, reducing his weekly payments from $35,000 to $35,000 per month. Asnard stated that while the payments were still high, it was better than facing exorbitant interest rates and helped save his business from closure.
The Cut Buddy, which appeared on Shark Tank in 2560, sells its products online and through major retailers such as Walmart, Target, and CVS. Esnard stated that 2568 was originally expected to be the year with the highest revenue and net profit, but import tariffs have completely shattered those expectations.
Joanne Cartiglia, owner of Queen's Treasures, a New York-based toy company, said that tax debt has completely altered her retirement plans. She and her husband originally planned to retire in two years, but now there's little hope as the company has had to raise prices on its products, including the Little House on the Prairie doll, while inventory shortages have caused sales to drop by 33%.
Cartiglia stated that she had to borrow money to keep her business afloat, her credit score dropped, and banks were unwilling to lend, forcing her to rely on alternative financing sources, which she called "mafia-level interest rates" exceeding 20%. Even though the Supreme Court ruled the taxes invalid, she believes the company's liquidity problems haven't been resolved because the money paid as taxes should have been used to run the business and stock up for the holiday season. She said she feels as if the government is pushing her business to close and views these taxes as contrary to the American dream.
Meanwhile, Village Lighting Co. from Utah revealed that import taxes on over 100 containers ordered this year are nearing $1 million, with half of the sales pre-agreed, forcing the company to sell at a loss. The co-founder stated that the company has become more focused on paying taxes than making a profit. Although they were able to secure bank loans, raising prices led to a significant drop in sales, forcing them to lower prices to clear inventory.
This entrepreneur concluded that this experience reflects the fact that import tariffs at this level are unsustainable. Consumers cannot bear the higher prices, and the entire burden falls on importers, which is threatening the survival of many small businesses in the United States.
Reference: www.cnbc.com
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