In recent years, the process of obtaining a small business loan has evolved, introducing a new layer of complexity for business owners. Lenders have increasingly sought to understand how potential borrowers might be affected by President Trump’s recent and highlyagnetic trade policy measures. These measures, which include a 10% baseline levy on all imports and significantly higher tariffs on specific countries like China and the European Union, are meant to counter the “Liberation Day” declaration on April 2nd. However, the unpredictability and uncertainty of Trump’s trade policies pose a significant challenge for lenders, as small business owners often lack the ability to anticipate such changes. This reliance on immediate decisions reduces the fuzziness lenders often attempt by awaiting detailed discussions.
Originally founded in 1958, the ” Coleman Report” serves as a trade publication for small business bankers and lenders, providing updates and insights. In a recent article, Bob Coleman, its publisher, highlighted the growing concern among lenders about how President Trump’s trade policies could impact borrowers.ainaColeman shared a conversation between a chief credit officer and Coleman, stating that underwriters are being instructed to consider how President Trump’s unpredictitious trade policy may affect borrowers’ future cash flow. The officer did not specify the exact methodology for analysis, only indicating that a focus on borrowing cost factors and financial standing would be emphasized.
The announcement from President Trump was immediately met with trading roomhoria as the S&P 500 futures dropped by 3%. The dollar weakened, leading to a rise in Treasury yields to six-month lows, as investors sought safe-haven assets. These market dynamics and yield changes have created a climate of uncertainty in financial planning for small businesses, forcing many to shift their strategies.
Since taking office in January, Trump’s trade policies have fluctuated ever since, particularly in response to a series of administration actions. In February, the administration faced a retrieval and increased tariff on goods imported from Canada and Mexico. However, once Spiro and publicTodd called it back, the tariffs on Chinese goods escalated, reaching 54% after a so-called “Liberation Day” declaration on April 2nd. The exact scope and duration of this plan remain unclear, adding layers of uncertainty to the lending process.
R lenting to the Truliant Federal Credit Union and host of the podcast “The Art of SBA Lending,” Ray Drew highlighted how small business owners are experiencing financial pressures amid these aggressive policies. While some companies may benefit long-term if manufacturing returns to the U.S., many are struggling to pass the increased costs onto consumers, especially those with limited inventory flexibility. As Drew notes, while small business administration Administrator Kelly Loeffler has expressed policy preferences, in mid-March she shared the results of the “Freedom Economy Index,” revealing that only 17% of small businesses are concerned about these trade policies. However, as Drew suggests, this level of concern represents significant implications for manySin decubitus redit, and lenders are forced to seek more transparency.
This situation underscores a broader issue with small businesses: their ability to anticipate such policy changes remains limited. Lenders are increasingly relying on immediate voices to gauge potential outcomes, thereby reducing the emphasis on detailed discussions and quantitative analysis. In contrast, small business Berns are forced to navigate uncertainty, often relying on the fear of losing control. Drew emphasizes that no matter the government’s actions, the real challenges remain for small businesses to pass increased costs to consumers and to maintain financial flexibility for the long term. This interplay between government intervention, economic uncertainty, and consumer behavior is driving the industry to grapple with new strategies and expectations, as the “Liberation Day” declaration signifies a new era of regulatory risk for the business ecosystem.
