{"id":1094,"date":"2025-04-06T15:20:26","date_gmt":"2025-04-06T15:20:26","guid":{"rendered":"https:\/\/www.insuracarelife.com\/blog\/small-businesses-face-a-tornado-of-challenges-cuts-freezes-and-now-tariffs\/"},"modified":"2025-04-06T15:20:26","modified_gmt":"2025-04-06T15:20:26","slug":"small-businesses-face-a-tornado-of-challenges-cuts-freezes-and-now-tariffs","status":"publish","type":"post","link":"https:\/\/www.insuracarelife.com\/blog\/small-businesses-face-a-tornado-of-challenges-cuts-freezes-and-now-tariffs\/","title":{"rendered":"Small Businesses Face a \u2018Tornado\u2019 of Challenges: Cuts, Freezes and Now Tariffs"},"content":{"rendered":"<div data-testid=\"companionColumn-0\">\n<div class=\"css-53u6y8\">\n<p class=\"css-at9mc1 evys1bk0\">It was a bad week for Ben Coryell, who runs a wilderness guiding company in Golden, Colo.<\/p>\n<p class=\"css-at9mc1 evys1bk0\">He got several calls from customers who wanted to cancel their climbing courses and mountaineering expeditions over the summer, often citing second thoughts about big purchases as the Trump administration has thrown the economy into turmoil with eye-watering tariffs.<\/p>\n<p class=\"css-at9mc1 evys1bk0\">At the same time, Mr. Coryell is wondering how long his business, <a class=\"css-yywogo\" href=\"https:\/\/www.goldenmountainguides.com\/\" title=\"\" rel=\"noopener noreferrer\" target=\"_blank\">Golden Mountain Guides<\/a>, can continue to offer those trips, as personnel cuts at the National Park Service have held up the processing of the permits he needs to operate along high-demand routes. And with those cuts leaving fewer rangers on patrol, he fears that unlicensed operators could run amok.<\/p>\n<p class=\"css-at9mc1 evys1bk0\">So far he hasn\u2019t laid anyone off, but it seems increasingly likely that he may have to.<\/p>\n<p class=\"css-at9mc1 evys1bk0\">\u201cIt\u2019s really starting to feel like a lot of the operations we\u2019ve depended on might have to be bumped for the next number of years until we can find a healthy status quo,\u201d he said.<\/p>\n<\/div>\n<aside class=\"css-ew4tgv\" aria-label=\"companion column\"\/><\/div>\n<div data-testid=\"companionColumn-1\">\n<div class=\"css-53u6y8\">\n<p class=\"css-at9mc1 evys1bk0\">Thousands of entrepreneurs are finding themselves in similar positions as they confront the blizzard of changes from Washington over the last two and a half months. Funding freezes, staffing cuts to federal agencies and an immigration crackdown \u2014 along with, of course, tariffs \u2014 are throwing many into turmoil, with little certainty about how to proceed.<\/p>\n<\/div>\n<aside class=\"css-ew4tgv\" aria-label=\"companion column\"\/><\/div>\n<div data-testid=\"companionColumn-2\">\n<div class=\"css-53u6y8\">\n<p class=\"css-at9mc1 evys1bk0\">\u201cIt\u2019s feeling like a tornado to small-business owners,\u201d said Natalie Madeira Cofield, chief executive of the Association for Enterprise Opportunity, which supports initiatives to help companies with fewer than 10 employees. \u201cThis is an unprecedented moment.\u201d<\/p>\n<p class=\"css-at9mc1 evys1bk0\">The last few years have been a whirlwind for this part of the private sector, which is critical to feeding the American economy with new ideas and competitive vigor. The Covid-19 pandemic ushered in a boom of business formation, and many of those start-ups continued to thrive in new niches, with modern practices.<\/p>\n<p class=\"css-at9mc1 evys1bk0\">Then, a surge in inflation, followed by a run-up in interest rates, stretched many small enterprises to their limit. Small firms have fewer employees on average than they did before the pandemic, according to the payroll platform Homebase; hiring declined 1.6 percent in the first quarter of 2025 from a year earlier. And data from the accounting software company QuickBooks shows that the set of businesses with fewer than 10 workers started <a class=\"css-yywogo\" href=\"https:\/\/quickbooks.intuit.com\/r\/small-business-data\/index\/#us-employment\" title=\"\" rel=\"noopener noreferrer\" target=\"_blank\">shrinking rapidly<\/a> in March 2024.<\/p>\n<p class=\"css-at9mc1 evys1bk0\">The economist who compiles those numbers, Ufuk Akcigit of the University of Chicago, also found in a <a class=\"css-yywogo\" href=\"https:\/\/www.nber.org\/papers\/w33618\" title=\"\" rel=\"noopener noreferrer\" target=\"_blank\">working paper<\/a> released last month that small businesses started to run up their credit card bills in 2021, incurring heavy interest payments. As interest rates rose in 2022, revenues declined and more businesses became delinquent.<\/p>\n<\/div>\n<aside class=\"css-ew4tgv\" aria-label=\"companion column\"\/><\/div>\n<div data-testid=\"companionColumn-3\">\n<div class=\"css-53u6y8\">\n<p class=\"css-at9mc1 evys1bk0\">\u201cSmall businesses don\u2019t have internal capital to rely on,\u201d Dr. Akcigit said. \u201cAs a result, if there\u2019s any financial difficulty, they\u2019re the first group to be left out of the credit market.\u201d<\/p>\n<p class=\"css-at9mc1 evys1bk0\">Nonetheless, optimism spiked to record levels following the election of Donald J. Trump last year, according to a <a class=\"css-yywogo\" href=\"https:\/\/www.nfib.com\/news\/monthly_report\/sbet\/\" title=\"\" rel=\"noopener noreferrer\" target=\"_blank\">long-running survey<\/a> by the National Federation of Independent Business, which represents small and midsize companies.<\/p>\n<p class=\"css-at9mc1 evys1bk0\">Holly Wade, executive director of the organization\u2019s research center, said the exuberance stemmed from her members\u2019 expectations of favorable tax policy and relaxed regulations. Although that optimism reading faded in February, she said, Congress and the White House are so far following through on their promises. Ms. Wade cited as one example the <a class=\"css-yywogo\" href=\"https:\/\/home.treasury.gov\/news\/press-releases\/sb0038\" title=\"\" rel=\"noopener noreferrer\" target=\"_blank\">Treasury Department\u2019s announcement<\/a> that it would not enforce a new law requiring corporate entities to disclose their true owners, with fines for noncompliance.<\/p>\n<p class=\"css-at9mc1 evys1bk0\">\u201cThose are some really early wins by small-business owners on an issue that impacted most of them with the regulatory paperwork burden,\u201d Ms. Wade said.<\/p>\n<p class=\"css-at9mc1 evys1bk0\">The administration agreed. \u201cPresident Trump is quickly cleaning up Biden\u2019s mess by rolling back 10 regulations for every new regulation, unleashing American energy, cutting taxes and leveling the playing field for American businesses,\u201d said Taylor Rogers, an assistant White House press secretary. <\/p>\n<\/div>\n<aside class=\"css-ew4tgv\" aria-label=\"companion column\"\/><\/div>\n<div data-testid=\"companionColumn-4\">\n<div class=\"css-53u6y8\">\n<p class=\"css-at9mc1 evys1bk0\">But not every move has been as welcomed.<\/p>\n<p class=\"css-at9mc1 evys1bk0\">The first blow was a freeze on grants and contracts \u2014 especially for veteran-owned businesses, which often do most or all of their business with the federal government. According to Nancy Langer, who runs a consulting firm that specializes in mergers and acquisitions for government contractors, some are already going bankrupt.<\/p>\n<p class=\"css-at9mc1 evys1bk0\">\u201cI don\u2019t think they realized that it would have such an eviscerating effect on veteran-owned businesses, but it has,\u201d Ms. Langer said. \u201cThe entire small-business community in the federal marketplace is recognizing that this is a whole other paradigm.\u201d<\/p>\n<p class=\"css-at9mc1 evys1bk0\">Now, new opportunities are evaporating, too.<\/p>\n<p class=\"css-at9mc1 evys1bk0\">On his first day in office, Mr. Trump issued an <a class=\"css-yywogo\" href=\"https:\/\/www.whitehouse.gov\/presidential-actions\/2025\/01\/initial-rescissions-of-harmful-executive-orders-and-actions\/\" title=\"\" rel=\"noopener noreferrer\" target=\"_blank\">executive order<\/a> that substantially reduced the share of federal purchasing dollars that go toward small and disadvantaged businesses. (The Biden administration had <a class=\"css-yywogo\" href=\"https:\/\/www.congress.gov\/crs_external_products\/IN\/PDF\/IN12514\/IN12514.2.pdf\" title=\"\" rel=\"noopener noreferrer\" target=\"_blank\">raised the target to 15 percent<\/a>, three times the statutory minimum, and achieved <a class=\"css-yywogo\" href=\"https:\/\/www.sba.gov\/article\/2025\/01\/10\/biden-harris-administration-awards-record-breaking-183b-federal-contracts-small-businesses-marking\" title=\"\" rel=\"noopener noreferrer\" target=\"_blank\">record levels of procurement<\/a> with small businesses.)<\/p>\n<p class=\"css-at9mc1 evys1bk0\">Rachel Klein\u2019s production company, Fire Starter Studios, had come to depend on those contracts in recent years as the Los Angeles film industry lost steam. As a small, woman-owned business, Fire Starter had a slight competitive edge when bidding for short documentaries, public-service announcements and promotional videos for federal clients.<\/p>\n<p class=\"css-at9mc1 evys1bk0\">But in the last few months, those solicitations have dried up. A $200 million contract for promoting the Department of Homeland Security\u2019s immigration enforcement work <a class=\"css-yywogo\" href=\"https:\/\/apnews.com\/article\/dhs-immigration-award-republican-ad-campaign-e7939619195791493e828dfd20604d65\" title=\"\" rel=\"noopener noreferrer\" target=\"_blank\">skipped competitive bidding<\/a> and went to two Republican ad makers. With no improvement on the horizon, Ms. Klein made the difficult decision to sell the sound stage that she built.<\/p>\n<\/div>\n<aside class=\"css-ew4tgv\" aria-label=\"companion column\"\/><\/div>\n<div data-testid=\"companionColumn-5\">\n<div class=\"css-53u6y8\">\n<p class=\"css-at9mc1 evys1bk0\">\u201cIt\u2019s more than just, \u2018Are you making money anymore?\u2019\u201d Ms. Klein said. \u201cIt\u2019s the absolute stress monkey that is now hanging around my neck, banging me on the head, going, \u2018You get it! You don\u2019t get it! You\u2019re broke! You\u2019re not broke!\u2019\u201d<\/p>\n<p class=\"css-at9mc1 evys1bk0\">Along with trying to lift small businesses through procurement, the federal government has aided them with loans, technical assistance and networking. Parts of that supportive ecosystem are now at risk as well.<\/p>\n<p class=\"css-at9mc1 evys1bk0\">The Small Business Administration, for example, has announced <a class=\"css-yywogo\" href=\"https:\/\/www.sba.gov\/article\/2025\/03\/21\/small-business-administration-announces-agency-wide-reorganization\" title=\"\" rel=\"noopener noreferrer\" target=\"_blank\">plans to cut its work force<\/a> by 43 percent. While the agency had expanded its head count significantly over the past five years to administer pandemic-era relief programs, shedding that many people \u2014 partly through voluntary buyouts \u2014 could strain the agency\u2019s flagship loan program.<\/p>\n<p class=\"css-at9mc1 evys1bk0\">The Small Business Administration has also become increasingly important in dispensing funds after natural disasters. But the primary agency responsible for relief is the Federal Emergency Management Agency, which Mr. Trump has proposed eliminating. That unnerves Janice Jucker, a co-owner of Three Brothers Bakery in Houston, who has needed federal assistance to recover from multiple major storms.<\/p>\n<p class=\"css-at9mc1 evys1bk0\">\u201cFor me, FEMA is all about getting my community up and running so they can shop at my shop,\u201d Ms. Jucker said. She is pushing Texas legislators to pick up the slack.<\/p>\n<\/div>\n<aside class=\"css-ew4tgv\" aria-label=\"companion column\"\/><\/div>\n<div data-testid=\"companionColumn-6\">\n<div class=\"css-53u6y8\">\n<p class=\"css-at9mc1 evys1bk0\">Some federal agencies have been targeted for near elimination.<\/p>\n<p class=\"css-at9mc1 evys1bk0\">In mid-March, the White House issued an <a class=\"css-yywogo\" href=\"https:\/\/www.whitehouse.gov\/presidential-actions\/2025\/03\/continuing-the-reduction-of-the-federal-bureaucracy\/\" title=\"\" rel=\"noopener noreferrer\" target=\"_blank\">executive order<\/a> aimed at stripping down the Community Development Financial Institutions Fund, an office at the Treasury Department that supports lending to disadvantaged people, businesses and places. The office and its funding have long had bipartisan support, and senators from both parties rallied to save it.<\/p>\n<p class=\"css-at9mc1 evys1bk0\">But Mark Pinsky, who has worked in community development banking for decades and now runs a <a class=\"css-yywogo\" href=\"https:\/\/www.cdfifriendlyamerica.com\/\" title=\"\" rel=\"noopener noreferrer\" target=\"_blank\">company<\/a> that seeks to direct low-interest financing to underserved areas, sees the political environment as deflating banks\u2019 willingness to take part after years of steady growth.<\/p>\n<p class=\"css-at9mc1 evys1bk0\">\u201cThe changes are like a glacial pulling back,\u201d Mr. Pinsky said. \u201cIt\u2019s not a tsunami. But it\u2019s hard to reverse direction.\u201d<\/p>\n<p class=\"css-at9mc1 evys1bk0\">The White House has been more effective in all but eliminating another entity named in that executive order: the Minority Business Development Agency, which the Biden administration had reinvigorated with new funding through the American Rescue Plan Act of 2021. It is now down to three staff members, with several dozen others on administrative leave.<\/p>\n<p class=\"css-at9mc1 evys1bk0\">The small office had acted mostly through its regional partners, which hosted conferences and provided counseling to small disadvantaged businesses. Jesse Villarreal, who owns <a class=\"css-yywogo\" href=\"https:\/\/trooperusa.com\/\" title=\"\" rel=\"noopener noreferrer\" target=\"_blank\">TrooperUSA<\/a>, a 160-person janitorial firm in Mesa, Ariz., said he met clients, lenders, and partners for joint ventures through the agency\u2019s events.<\/p>\n<\/div>\n<aside class=\"css-ew4tgv\" aria-label=\"companion column\"\/><\/div>\n<div data-testid=\"companionColumn-7\">\n<div class=\"css-53u6y8\">\n<p class=\"css-at9mc1 evys1bk0\">\u201cI have the good fortune of being on the successful side because of their support,\u201d Mr. Villarreal said. \u201cNow the federal government\u2019s doing away with the program. We\u2019re very concerned because we do need people to help us.\u201d<\/p>\n<p class=\"css-at9mc1 evys1bk0\">The latest hurdle for small businesses is the Trump administration\u2019s steep tariffs imposed on imports from nearly every country.<\/p>\n<p class=\"css-at9mc1 evys1bk0\">Although small businesses are less likely to export than larger ones, they do depend on imports, and tend to have less flexibility in changing their suppliers. Sudden new expenses can force them to cut back in other areas or even to fall behind on bills.<\/p>\n<p class=\"css-at9mc1 evys1bk0\">Fort Hamilton, a rye and gin distillery in Brooklyn, is relatively lucky \u2014 it sources its grain from New York State. But its glass bottles come from India, its elaborate labels from a specialty printer in Britain and its corks from Mexico or Argentina. Switching any of those would require expensive new molds and designs, even if a domestic supplier could be found.<\/p>\n<p class=\"css-at9mc1 evys1bk0\">So instead, Alex Clark, a co-founder, decided to order as much as he could store ahead of the tariffs \u2014 about four months\u2019 supply of bottles and a year\u2019s worth of labels. But spending that cash meant he couldn\u2019t add a sales person to his 11-member staff, which he had been planning.<\/p>\n<p class=\"css-at9mc1 evys1bk0\">\u201cWe think there\u2019s plenty of opportunities for continued growth, but it is going to take more bodies,\u201d Mr. Clark said. \u201cAnd it\u2019s difficult to put the body in when you don\u2019t know what the future looks like.\u201d<\/p>\n<\/div>\n<aside class=\"css-ew4tgv\" aria-label=\"companion column\"\/><\/div>\n","protected":false},"excerpt":{"rendered":"<p>It was a bad week for Ben Coryell, who runs a wilderness guiding company in Golden, Colo. He got several calls from customers who wanted to cancel their climbing courses and mountaineering expeditions over the summer, often citing second thoughts about big purchases as the Trump administration has thrown the economy into turmoil with eye-watering [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":1095,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[387,627,452,782,784,386,199,783],"class_list":["post-1094","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-blog","tag-businesses","tag-challenges","tag-cuts","tag-face","tag-freezes","tag-small","tag-tariffs","tag-tornado"],"_links":{"self":[{"href":"https:\/\/www.insuracarelife.com\/blog\/wp-json\/wp\/v2\/posts\/1094","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.insuracarelife.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.insuracarelife.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.insuracarelife.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.insuracarelife.com\/blog\/wp-json\/wp\/v2\/comments?post=1094"}],"version-history":[{"count":0,"href":"https:\/\/www.insuracarelife.com\/blog\/wp-json\/wp\/v2\/posts\/1094\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.insuracarelife.com\/blog\/wp-json\/wp\/v2\/media\/1095"}],"wp:attachment":[{"href":"https:\/\/www.insuracarelife.com\/blog\/wp-json\/wp\/v2\/media?parent=1094"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.insuracarelife.com\/blog\/wp-json\/wp\/v2\/categories?post=1094"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.insuracarelife.com\/blog\/wp-json\/wp\/v2\/tags?post=1094"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}