Trump tariffs led businesses to take high interest rate loans

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 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 which 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.

Ensard 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-rate payments through a loan from The Business Consortium Fund, which focuses on minority…