Small Businesses Turn to Lending Startups as Tariff Costs Mount [View all]

Source: msn/Bloomberg

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(Bloomberg) -- Joseph Asia faced a dilemma. Tariffs imposed on his Chinese-grown, kosher frozen vegetables were jacking up his costs by about $2,000 for every shipping container entering the US. But the Brooklyn owner of Pardes Farms Inc. didn’t want to raise prices. So to help cover the tariffs and avoid a cash crunch, Asia swallowed hard and took out a $200,000 credit line charging 20%-plus interest. He has plenty of company.

Slope Inc., the JPMorgan Chase & Co.-backed lending startup that arranged the short-term financing, says applications for its credit lines surged 730% year over year in August. That’s when it became clear to importers like Asia that tariffs averaging 50% on Chinese goods would be in place until at least November as Washington and Beijing continue to negotiate.

“We’ve seen a huge demand spike because of tariffs,” Slope co-founder Alice Deng said in an interview. “The impact was immediate.”

President Donald Trump has said his tariff strategy will protect American industry and bring well-paying manufacturing jobs back to the US. A coalition of small businesses, including a fishing tackle retailer and a pipe manufacturer, disagrees and has filed a lawsuit challenging Trump’s authority to unilaterally impose tariffs. The US Supreme Court is scheduled to hear the case in November. But anyone importing products must pay the duties in the meantime, and many firms are stocking up now for the holiday shopping season.

Read more: https://www.msn.com/en-us/money/personalfinance/small-businesses-turn-to-lending-startups-as-tariff-costs-mount/ar-AA1MzBC0