President Donald Trump’s first weeks in office have brought a flurry of changes from funding freezes and tariffs to a crackdown on diversity efforts. While courts have halted some of them, small businesses faced with higher costs, steep interest rates and more cautious consumers share a similar message: This isn’t helping.
David Funk said he was stunned when the U.S. Department of Agriculture rejected his $65,000 invoice for work his company had completed since October.
The founder of Zero Emissions Northwest, a Spokane, Washington-based consultancy, Funk connects farmers with federal grants to subsidize equipment purchases and energy bills. A week after his invoice denial, agency representatives confirmed it was because of Trump’s “Unleashing American Energy” order, which halted many projects funded through the Inflation Reduction Act.
“What it’s resulting in is jobs lost, projects canceled and more jobs lost,” said Funk, who furloughed all three of his employees about two weeks ago. Many of his clients are now stuck with equipment they can’t finance on their own. “It is shocking to some of them who have voted for Trump to realize that this might directly impact them,” he added.
Weeks after the Office of Management and Budget rescinded the sweeping freeze on grants and loans it had issued days earlier, Shaundell Newsome, founder of Sumnu Marketing in Las Vegas, said his agency’s internships could still be on the chopping block. The program, with space for four interns per year, is sustained by a Labor Department grant.
“There’s a ton of confusion about what’s real and what’s not real,” he said of the federal directives. “If we don’t have those dollars to offset the training now, we’ve got to make a business decision.”
Newsome still plans to make his next hire in March, after the agency that disburses the funds said they remained on track to reach him on schedule. But he’s concerned about funding for the rest of the year, including a summer program for high schoolers.
Funk shared that sense of urgency. “Not getting paid due to a canceled contract and not getting paid due to a paused contract has the same result: We’re not getting paid,” he said.
While small businesses remain broadly optimistic about the months ahead, the National Federation of Independent Business’ latest survey also found that members’ uncertainty hit its third-highest level on record. Many reported curtailing plans to invest in their businesses, wary of tapping cash reserves should economic conditions deteriorate.
Meanwhile, the leaders of major tech firms have been personally courting the president’s favor, and there are signs of executives warming up to an administration promising deeper tax cuts and deregulation. But the nation’s 33 million small businesses, which employ nearly half the U.S. workforce and account for over 43% of economic output, typically have less lobbying clout or margin to adapt to federal policy swings, advocates say.
“We want to see more parity,” said Richard Trent, executive director of Main Street Alliance, a coalition of more than 30,000 small businesses. Trent criticized the “oligarchic acolytes” who he said appeared to be in Trump’s “inner circle” and called for a more “nuanced conversation where everyone’s included.”
A White House spokesperson didn’t respond to a request for comment.
Trump’s business-friendly reputation was one of the leading factors that helped return him to the White House. While the U.S. averaged 443,302 monthly business applications during the first three years of the Biden administration as the economy recovered from Covid-19, compared with 282,362 in the equivalent period of Trump’s first term, many entrepreneurs recall the current president’s earlier time in office favorably. The NFIB’s optimism index soared at the time, buoyed in part by Trump’s tax cuts, and interest rates and inflation both remained historically low until the pandemic hit.
Still, some small-business owners are now taking steps to insulate themselves from the potential negative impacts of recent White House efforts — including those that remain in limbo — before waiting to see how it all shakes out.
Shortly after the election, Beatrice Barba told NBC News she was looking to purchase $200,000 worth of her regular inventory ahead of Trump’s promised tariff. The sippy cups she sells at Tabor Place, her San Francisco Bay Area e-commerce line of children’s goods, rely on a durable borosilicate glass from a Chinese manufacturer.
But in recent weeks, Barba has opted to gamble on less cash-intensive measures. She’s reduced the order to $100,000 to avoid having the products sit idle for too long, and while some of her other items need to be restocked — at an expected $50,000 cost — she’s holding off for now. Barba said she suspects Trump’s 10% additional tariffs on China could change or go away in trade negotiations.
“That’s an extra 5,000 bucks. I don’t want to have to spend that,” she said. “Ten percent is a lot. There is no company, retail or otherwise, that would not be forced to pass that margin on to their customers.”
Barba said there are ways the administration could help small businesses directly, such as by offering loans to build more U.S. factories so companies like hers could rely less on components made overseas. She’d also like to see tariff exemptions for employers of fewer than 50 people.
The full effects of Trump’s economic policies remain to be seen. In a note to clients this month, JPMorgan analysts posed the question, “Is this a business friendly administration?”
They highlighted the potential economic drag created by abrupt, sweeping changes to U.S. policy, including mass deportations that the White House is looking to ramp up. The impact of moves like these could be magnified “through a tightening in labor markets that constrains Fed easing,” they said, flagging the risk that more uncertainty could delay interest rate cuts.
The longer steep borrowing costs persist, the more Main Street entrepreneurs could suffer a disproportionate squeeze, said Joe Seydl, senior markets economist at J.P. Morgan Private Bank.
“Small businesses tend to be more leveraged than larger businesses,” he said. “They tend to borrow more at the short end of the yield curve, rather than the long end, and they tend to have significantly less cash holdings.”
Corrine Hendrickson, owner of a day care center in New Glarus, Wisconsin, said she has “an extra layer of concern because I don’t have access to capital.” She began scrambling upon learning of last month’s funding freeze, unsure if she could sustain her business without the Child Care and Development Block Grant that subsidizes care for a number of her clients.
“[One parent] saw the news and was concerned she wouldn’t get the funding, and wasn’t sure how they would pay me the next month, and what that would mean. Would I expel him?” she said.
Hendrickson said the subsidies resumed on Feb. 1, soon after the White House lifted its funding freeze following a court ruling that halted it. But she’s nervously watching as Republicans pursue deep spending cuts to accommodate Trump’s agenda, with one proposal calling for potential cuts to the Supplemental Nutrition Assistance Program that helps fund the healthy meals Hendricks provides.
She’s also worried that the child care grant itself, which is run through the Department of Health and Human Services, could be on the chopping block. Hours after his confirmation as head of the department this week, HHS Secretary Robert F. Kennedy Jr. hinted at firings in a televised interview.
An HHS representative said in an email that “there are no current cuts, pauses, or disruptions to the Child Care and Development Block Grant.”
Still, Hendrickson said she’s wondering, “Do I continue to do this, or do I look for a different job?” She added: “It really just makes me nervous that I will be able to maintain my program and my business, and my life’s work.”
CORRECTION: (Feb. 16, 2025, 11:40 a.m. ET): A previous version of this article misnamed the owner of Corrine’s Little Explorers. Her last name is Hendrickson, not Hendricks.
