How small businesses are being stifled during the government shutdown

, How small businesses are being stifled during the government shutdown
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How small businesses are being stifled during the government shutdown

As the longest government shutdown in history continues, the impact is being felt beyond Washington, DC and 800,000 federal government employees.

From small business owners to farmers to homebuyers, we shine a spotlight on how the shutdowns are affecting ordinary Americans.

Federal contractor employees are being laid off in their thousands

The federal government is the largest buyer of goods and services in the world. Federal contractors and subcontractors provide these services, selling everything from office supplies to cleaning products, critical cybersecurity solutions to call center services.

Stopped contracts mean contractors are not getting paid, and current estimates suggest the outage is costing them $1.5 billion per week. This does not bode well for the millions of people working in the contract community. NextGov wrote According to David Berteau, head of the Professional Services Council, which represents the business community, “tens of thousands” of people are being laid off or losing their jobs.

While larger contractors can shift staff to fully funded contracts, smaller contractors and subcontractors don’t have that option. “We’ve heard from a number of companies facing a dilemma,” Berteau said, “Do I get rid of employees and save money, or do I eliminate money to save employees and go out of business? “. “If this continues for much longer, we will see many companies closing because they don’t have credit limit available.”

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Farmers miss out on important subsidies

After a challenging year with extreme weather and trade tariffs, American farmers are suffering another setback. Last summer, many farmers took advantage of subsidies from the U.S. government’s Agricultural Services Administration to offset the impact of the trade war, but others were unable to certify their crops (another step). important for grant approval) before offices close due to shutdown.

Stuck without a benefit check, many face cash flow problems, and even bankruptcy. “Younger farmers or farms that are not well established are the ones most at risk,” says Richard Wilkins, a farmer and president of the Delaware Farm Bureau. Delmarva right now (part of the USA Today network).

Over 300 Small Business Loans Per Day Unprocessed

Small businesses are the lifeblood of the US economy, creating 8.4 million net new jobs between 2000 and 2017, nearly twice as many as large businesses and affecting 99.9% of all businesses. (follow SBA).

Small businesses depend on loans and other forms of credit to finance working capital, bridge cash flow gaps, and grow funds. The majority of this funding comes from the US Small Business Administration (SBA), which in fiscal year 2017 approved more than 30 billion dollars through the 7(a) and 504 loan programs.

Beginning December 22, 2018, the SBA, which processes about 300 loan applications a day, has halted loan programs that have left small business owners unable to access vital funding. As Washington Post reported, many businesses have new growth plans for 2019. One such business owner is Brooks Troxler from North Carolina, who applied for a $550,000 SBA-backed loan to purchase new commercial real estate.

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Not only is the loan in question, but Troxler is in danger of losing “…all of the money he has poured into due diligence, paperwork, fees and environmental assessments over the past few months to get the deal done. this”.

Speaker of the House Committee, Nydia M. Velazquez (DN.Y.) told The Washington Post The “level of anxiety is unprecedented” and urged the President to reopen the SBA’s lending programs, saying “the agency must take proactive measures.”

The economy in general

Some projections of the broader impact of the shutdown on the nation’s economy are double that the White House originally estimated, reducing economic growth by 0.13% for every week it lasted.

Business owners are warning investors that the closures have hit revenue and they may never get it back. Eg, CNN reported Delta Airlines lost $25 million in January due to fewer bookings.

General uncertainty about the direction of the economy is also holding back potential homebuyers (home loan applications require a transcript of Form 4506-T to verify income from the IRS). Additionally, rural areas could be hit harder by the suspension of the US Department of Agriculture’s $24 billion housing loan guarantee program.

And the list goes on.

Uncertain times have uncertain outcomes and the full impact of the outage is not yet known. One thing is for sure, it’s not good for America’s workers or businesses.

Read on for tips to minimize the impact of shutdowns:

Government shutdown: How to prepare and mitigate the impact

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