US Small Businesses Turn to Cash Advances Amid Trump Tariff Strains

Small businesses in the US are turning to cash advances as a way to cope with the financial strain caused by President Trump's tariffs. According to the Federal Reserve's Small Business Credit Survey, 12% of firms applied for merchant cash advances in 2025, up from 9% in 2024.

The survey also found that effective borrowing costs for these advances can reach as high as 50% to 100%, with over 40% of firms citing tariff-driven costs as a financial challenge. Aharon Margolin, founder of Tariff Recovery Group, says businesses across industries are seeking financing due to growing tariff payments and tightened cash flow.

Aharon Margolin: 'The pressure is not limited to importers paying duties directly. Businesses such as cafes also face broader increases in goods costs, leaving owners with tighter cash flow and a greater need for additional capital.'

Ami Kassar, founder of Multifunding, warns that these high-cost financing options can create debt traps through repeated refinancing and stacking.

The survey finds that more than 40% of firms identify tariff-related cost increases as a financial challenge. Some relief is beginning to emerge, however, with the Supreme Court invalidating Trump-era tariffs under the International Emergency Economic Powers Act, prompting refunds for affected businesses.