Pashion, a shoe manufacturing company, produces its products in China due to the inability to find alternative manufacturers capable of meeting their scaling needs, despite attempts to engage factories in Vietnam, Brazil, India, and the U.S. This reliance on Chinese manufacturing has been compounded by financial challenges stemming from changes to federal loan qualifications. After qualifying for a $5 million loan from the Small Business Administration, Pashion faced a setback when the Trump administration altered the eligibility requirements to exclude companies with international shareholders; Pavone’s company raised 1.7% of its funding from such investors, resulting in the loan being withdrawn.
Pavone expressed frustration over feeling ignored and out of control, likening the experience to waiting for “the other shoe to drop.” Consequently, her growth plans suffered significantly. Inventory orders were drastically cut from $1 million for the fall and $1.5 million for the holidays down to roughly $300,000 each, with a focus on maintaining flexibility to handle tariff liabilities. To cope with increasing costs, Pashion implemented a tariff tax of $15 to $25 on each product sold in the U.S., which led to a 30% drop in consumer demand.
While some customers understand the situation, many are now priced out of the market, which has shifted the company’s focus from growth to survival. The combination of loan inaccessibility and tariff impacts has transformed what was expected to be a prosperous year into one characterized by efforts to remain financially stable.
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