Why It Matters
Small businesses face mounting pressure from tariffs, lending restrictions, and shifting interest rates heading into a Senate Small Business and Entrepreneurship Committee hearing titled "Hearings To Examine The Next 250, Focusing On Small Businesses Leading The Way." Sen. Joni Ernst (R-IA) chairs the committee and will preside over the hearing, scheduled Wednesday, August 5.
The Big Picture
The Federal Reserve Bank of New York found that small businesses were particularly challenged by higher tariffs in 2025, mostly passing the costs on to customers. Many firms are spreading price increases across extended periods, meaning inflationary pressure tied to tariffs may last for some time. The Trump administration imposed new Section 301 tariffs ranging from 10 percent to 12.5 percent on imports from 60 jurisdictions, including all 27 European Union member countries, effective July 24. Small businesses sued the Trump administration over the new tariffs in late July.
On the lending side, the Small Business Administration (SBA) announced that qualified borrowers may now combine their 7(a) and 504 loans for up to $10 million in SBA-backed financing, effective July 4, up from a previous limit of $5 million. The SBA's Office of Advocacy released an economic snapshot on July 21 reporting that prime interest rates, which determine the cost of borrowing for small businesses, have declined.
Yet access gaps remain. An SBA policy requires businesses seeking SBA loans to be 100 percent owned by U.S. citizens, nationals, and legal permanent residents, effectively excluding lawful permanent residents from accessing SBA loans. A small-business adviser who works with immigrant entrepreneurs worries the restrictions will push more business owners toward riskier or predatory lending.
Lobbying activity shows sustained focus on tariffs affecting small firms. We Pay the Tariffs filed a lobbying disclosure reporting $110,000 in activity in the fourth quarter of 2025 and $80,000 in the second quarter of 2026, both addressing tariffs on U.S. small businesses.
The Bottom Line
Tariff costs are still working through small-business supply chains. SBA lending policy is pulling in two directions at once, expanding capital access while narrowing who can reach it. Wednesday's hearing will likely test whether federal policy is helping small firms absorb the shock, or adding to it.
Access the Legis1 platform for comprehensive political news, data, and insights.
Spot something wrong? Report an issue with this article