Shutdown the Government = Shutdown Small Business

As the government shutdown continues, small businesses maybe suffering the most. “The federal government is the largest purchaser of goods and services in the world,” says Kevin Baron of the FDL. According to the Central Contractor Registry (CCR), just about 355,000 small businesses are registered to work for the federal government. The shutdown means that a large chunk of the federal government’s $530 billion average annual spending will not be spent; and that may mean hard times ahead for the 355 thousand small business that rely on that money. These small businesses employed by the federal government will have to manage cash flow as payments for government work have been delayed or canceled.

The government shutdown will affect small business in other ways too. With the shutdown, the small business administration (SBA) will delayed too. That means the more than 50 million in small businesses loans provided by the SBA each year will dry up and businesses that were relying on that money must wait.  According to Patrick Clark, a reporter for Bloomberg Business Week, the National Association of Development Companies plans to sell about $350 million in bonds backed by loans guaranteed by the SBA on Oct. 16, but it still needs signatures from SBA officials to go through with the sale. If that does not happen, about 500 small business owners who have had SBA loans approved will not get funding.

Without loans and the cash flow from the federal government, many small businesses will not have the equity to grow. 90 percent of all new jobs are created by small businesses and with out them, the nation’s economy might head right back into the depths of the recession. Only time will tell if the shutdown will end up rising unemployment as a result of hurting these types of small businesses.

Baron, Kevin. “Government Shutdown Could Push Small Businesses and U.S. Economy Over the Edge”. firedoglack.com. Oct. 2013.

Clark, Partick. “The Shutdown’s Ripples Are Already Frustrating Small Businesses”. buinessweek. 1 Oct. 2013.