Small businesses squeezed by rising tariff costs are increasingly turning to merchant cash advances a fast but expensive form of financing according to Federal Reserve data and interviews with business owners.
The Fed’s annual Small Business Credit Survey, released in March, found the share of firms applying for merchant cash advances rose to 12% in 2025, up from 9% in 2024. The overall share of firms applying for any financing held roughly steady at 38%.
Merchant cash advances, or MCAs, aren’t loans they’re financing agreements where lenders front cash in exchange for a cut of future sales. They can deliver capital fast, but at a steep cost. Some business owners told NPR they were offered interest rates north of 30%.
How it plays out
Joshua Esnard, a small business owner, told NPR he’s been flooded with texts and voicemails from lenders pitching quick cash the moment tariff bills come due. He ended up taking three separate merchant cash advances totaling $950,000 to cover tariff costs. After fees, his actual debt came to $1.2 million.
“When you’re desperate, and Customs has your product at the dock, and you got to deliver it to Walmart, Target or whatever, and you have to clear that out… you got to pay it,” Esnard said. “So where do you get the money from?”
Aharon Margolin, who worked in alternative financing when the tariffs hit and now runs a firm helping businesses recover tariff refunds, said the surge in applications was widespread and not limited to importers. He described working with a cafe owner whose costs rose even without directly paying tariffs, as the price of goods across their supply chain increased.
Even a legal win might not fix it
Some business owners are counting on a favorable outcome if the Supreme Court rules on the legality of the tariffs, but say it won’t undo the financial damage already done. Utah-based Village Lighting Co. said its tariff bill on shipping containers ordered this year is approaching $1 million; co-owner Jared Hendricks said about half the company’s sales are locked into agreements made before the new costs hit, forcing the company to sell at a loss.
Why it matters
Trump’s tariffs, revamped with a new round of duties effective July 24, have pushed some small businesses into short-term financing they’re now struggling to unwind even for companies with no direct import exposure, since rising costs ripple through supply chains regardless of who pays the tariff first.
