Small Businesses Turn to Risky Merchant Cash Advances Amid Trump's Tariffs
Many small businesses in the U.S. are facing increased operating costs due to President Donald Trump’s tariff policies that took effect on July 24, 2025. In response, some business owners are turning to merchant cash advances (MCAs), a form of high-cost financing where lenders provide upfront capital in exchange for a portion of future sales. The Federal Reserve's Small Business Credit Survey shows an increase from 9% to 12% in MCA applications between 2024 and 2025. Aharon Margolin, founder of Tariff Recovery Group, notes that businesses across industries are seeking financing due to tighter cash flow caused by higher tariffs or rising costs. While MCAs offer quick access to capital without credit checks or collateral, they come with steep factor rates equivalent to interest rates between 50% and 100%. Experts warn these loans can lead to debt traps as businesses may need to refinance repeatedly.
Topics: economic policy merchant cash advances small business financing tariffs