The 2025 Tariff Shock: What CFOs Must Do Now
Is your business ready for 25–30% tariffs and rising inflation? On April 2, the U.S. government announced an unprecedented set of tariffs now referred to as the “Liberation Day” measures. These sweeping trade actions raised the effective U.S. tariff rate to as high as 25–30%, levels not seen since the 1930s. For middle market companies, this isn’t just a political headline—it’s a direct threat to working capital, supply chains, and your relationship with your bank.
Here’s what you need to know—and what you need to do.
Tariffs = Inflation + Credit Tightening
According to KKR’s April macro update, the U.S. economy is now expected to grow just 0.5% in 2025—down from 2.1%. Inflation is projected to rise to 4.0%, driven by cost-push pressure from higher import prices.
When inflation rises but growth stalls, lenders reevaluate credit risk across the board. That means:
Tighter covenant requirements
Reduced ABL advance rates (especially on inventory and AR)
Stricter underwriting for renewals and LOCs
Longer than normal wait time for bank underwriting decisions
If your working capital cycle depends on imported goods, you may be hit twice: once on the cost side, and again when your lender reassesses risk.
“Banks are reacting to the economy. We help our clients react before the bank does. That’s the difference between getting ahead—and getting declined.”
— Stacey Huddleston, Founder, Green Zone Capital Advisors
Your 5-Point Capital Readiness Checklist
1. Analyze Your Inventory Exposure
Are your inputs or finished goods coming from tariff-hit countries (China, Vietnam, Mexico)? Expect cost surges—and lender scrutiny.
2. Run a Lender Scenario Test
What happens if your AR is revalued downward or your DSCR threshold tightens by 25bps? Green Zone runs proactive stress tests like this for clients before the bank does.
3. Review Your Reporting Lag
Most middle market companies are 45+ days behind on financial reporting. But banks want 30-day staleness or less. Fix this now—before your bank’s relationship manager flags it.
4. Renegotiate Terms While Credit Is Still Flowing
KKR’s data suggests over $6T in dry powder is still sitting on the sidelines, but it’s being deployed more cautiously. Get ahead of the repricing cycle now.
5. Communicate With Your Board and PE Sponsors
Don’t wait until renewal season to disclose tightening credit. Show you have a capital financing strategy in place with a capital markets advisor like Green Zone.
Loan Readiness Assessment Consultation Today
Green Zone’s POV: Don’t Just React—Preempt
At Green Zone, we specialize in capital financing strategy for high-growth companies. Our capital markets advisory team helps CFOs:
Build lender-ready financial reports the way banks want to see them
Conduct professional lender interviews to determine experience level
Develop a business narrative in commercial banker language
Negotiate improved loan structures before issues arise
When banks pull back, we help you stay in control.
Bottom Line: Working Capital Is About to Get More Expensive
Inflation eats your margin. Tariffs disrupt your cash cycle. Slower GDP pressures your revenue.
If you’re not proactively preparing for a tighter credit environment, you’re gambling with your future. Some businesses will adjust. Others will wait—and find out the hard way.
At Green Zone Capital Advisors, we’re not just consultants. We’re building a movement to put capital strategy back in the hands of business owners—not banks.
Need a second set of eyes on your capital plan? We can handle that!
Book a confidential strategy call. Your future lender will thank you
