The continued uncertainty over international tariffs imposed by the Trump administration has led to financial worries for many small businesses, although experts say many small businesses will weather the turmoil without much trouble.
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Continued uncertainty over tariff policies has become a major concern for a wide swath of the US small business community, a new white paper released this week before the Trump administration replaces expiring international tariffs. new contributions to 80 nationshe claims.
In its report, Crux Analytics, a small business banking platform, reports a 67% increase in small business bankruptcies in the first quarter of 2026. Increase in searches for “emergency loan” and “cash flow” on Google by small business owners. and a jump in Small Business Administration lending through fiscal year 2025 combined with a decline in traditional bank business lending. All of this, Crux analysts conclude, creates a historically uneasy atmosphere for the small business community.
The most likely culprit, the white paper argues, is the “whiplash” from the US’s ever-changing international tariff policies, which were overturned in February when the Supreme Court overruled some of the Trump administration’s tariffs that were implemented last year. But the president which was immediately enacted a new set of provisional tariffs on the same day the Supreme Court struck down the initial wave of levies. On July 24 these ended and that was it was replaced with new permanent tariffs.
Small business owners have been unable to shake off the effects of months of uncertainty caused by the tariff drama, says Jacob Bennett, CEO of Crux. “This is really a story about volatility,” he says. “We can find clear wins in recent tariff policy, but when it comes to individual small businesses … they’re basically operating in an environment where they don’t know how things are going to change, sometimes on a day-to-day basis.
The report further mentions the latest Fed Small Business Credit Surveyan annual survey of businesses with fewer than 500 employees, which found that 77% of small businesses cited rising costs as a major business barrier, including 40% who specifically said invoice-related costs were a major issue, particularly for manufacturers and retailers. The survey also found that 60% of small businesses applied for some form of funding in the previous 12 months, with 56% of them seeking loans to continue day-to-day business operations, while just 46% wanted capital to finance expansion plans.
In fiscal year 2025, the SBA disbursed a record $45 billion from its 7(a) and 504 loan programs, totaling more than 84,000 loans, which the Crux report interpreted as a “flight to government-guaranteed credit.”
The Crux report also pointed this out small business bankruptcies rose 67% year-on-year in the first quarter of 2026 to 833 from 499 in the same quarter last year and that total business bankruptcies rose 14% year-on-year to 8,436 from 7,375. (There are approx 36.2 million small businesses in the United States.)
And the report noted that a large number of small businesses are turning in desperation to expensive merchant cash advances or using high-interest credit cards or other expensive sources of cash that can create more long-term debt problems.
“One of the big things we’ve been looking at is people looking for emergency capital, essentially,” says Bennett. “Are they trying to figure out how do we do everything we can to put ourselves in the strongest position no matter what? For many, that means raising as much capital as possible. And unfortunately, in many cases that capital is not the healthiest capital.”
The bottom line, Bennett says, is that the overall economic picture could worsen after the July 24 tariff policy change for some small U.S. businesses
“What we’re seeing in the numbers is stress at levels that really haven’t existed historically in the small business economy,” says Bennett. “The worst case scenario is that these numbers don’t reverse and the economy feels the effect very quickly.”
But some other professionals who work directly with small businesses say they’re not as worried as Bennett.
“This change in pricing policy, I don’t know if it’s going to move the needle that much. I’m skeptical,” says Ami Kassar, CEO of Multifunding, a Philadelphia-based SBA deal broker. Kassar says his business is poised to grow between 80% and 100% this year to 2025 because there has been so much demand from his small business clientele for new SBA loans.
“There are definitely some businesses that are going through tough times and struggling … and there are some businesses that are cruising at 100 miles an hour and everything is fine,” Kassar says. “I don’t necessarily think of it as a macro trend.”
Kassar specifically took issue with the Crux Analytics report on small business bankruptcies that occurred in the first quarter of the year. It’s an unreliable statistic, he said, because with the average cost of $30,000 to $50,000 to file for business bankruptcy, most small businesses don’t even bother with the paperwork. “They usually just shut down,” he says.
“My suspicion is that many of the people who buy businesses and finance them through us feel extremely positive about the economy,” he adds.
But attorney Scott Oliver, a partner at Lewis Kappes in Indianapolis, says Forbes that he thinks the Crux report isn’t surprising, though it struck a nerve.
“If anything, it’s putting data behind some of the conversations we’ve been having with lenders, borrowers, people in the company for quite some time,” Oliver says. “Working capital management has become a much bigger focus (for small businesses), especially in the last couple of years.”
But Oliver cautions against reading too much into the Crux report’s conclusions about small businesses using SBA lending to “survive rather than grow,” and pointed out that the SBA has always been ready to lend to small businesses in need of working capital.
“The cash crunch, I think, is real,” says Oliver. “A lot of businesses, when they see tariffs, when they see these increases going forward, there could be a projected cash crunch that could force them to make decisions based on uncertainty.”
Oliver points out that the Crux Analytics report also failed to mention that there are subsets of specific SBA loan programs designed to provide cash to small businesses to help pay for day-to-day operations, even under the 7(a) loan program. These include the SBA Express, Export Working Capital and CAPLines programs, Oliver says.
For small businesses who may be panicking about the costs associated with invoices, Oliver says which loan to pursue depends largely on the amount of assets and collateral a business has, but that the SBA has “tailored loan solutions … that fit the unique needs of small businesses.”
Oliver also suggested that a certain level of small business owner anxiety is not only normal, but also healthy, to keep business owners wary of potential pitfalls coming their way. And, he says, some of the report’s statistics — such as bankruptcy numbers — were somewhat misleading in the context of potential tariff panic.
“I don’t really see today’s environment as one where healthy small businesses are collapsing en masse,” Oliver says. “It’s more of an environment where uncertainty increases the demand for capital. Businesses have to fund higher inventory costs, absorb the pressure… But that’s very different from saying it’s fundamentally unhealthy.”
Rand Larsen, founder and president of the small business advisory group Scalepath, also says he’s not overly concerned about the tariffs’ impact on his roughly 100 members, though he notes that manufacturers are likely to be in for a tough time and singled out the issue of “uncertainty.”
“That word, ‘uncertainty,’ has kind of been the word for the last year or two,” Larsen says, adding that just this week he asked his members about their attitudes toward the U.S. economy, and the average response was “cautious.”
“It seems like people are generally afraid to spend money,” Larsen says. “And it’s not necessarily due to a direct reason.”
That said, Larsen adds, maintaining working capital hasn’t been a real issue for any of the small businesses that are part of Scalepath. “If they want to raise equity or debt, they’re usually there,” Larsen says. “It never seemed to be a problem, when they need to access debt or equity, it usually comes from cash or an existing line of credit.”
The reality for American small businesses these days is a gray area somewhere between panic mode and complete confidence in the economy, Larsen says.
“It’s not like they’re seeing sunshine and rainbows,” Larsen says. “That picture doesn’t really show. However, their companies will grow through it… I don’t think anyone will go bankrupt anytime soon.”
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