With the federal government in a partial shutdown, around 30 million small businesses will likely be impacted.
The shutdown is the result of the Trump administration and Congress failing to reach a funding agreement that includes more than $5 billion the President wants to build his wall on the Mexican border. As a result, nine of 15 federal departments and dozens of agencies are closed or reducing operations.
According to USA Today, small to medium-size businesses (SMBs) looking for a loan from the U.S. Small Business Administration (SBA) won’t be getting a response during the shutdown. Not only are workers unable to process loan applications, but they also cannot respond to SBA emails or use any federal resources. Even SBA loan guarantees have been suspended during this time.
“Beginning at noon the day of the shutdown, non-excepted employees will no longer be permitted to utilize SBA email or other federal resources,” according to a message on the SBA website. “Please know that use of Federal resources while on furlough status is prohibited by law and is considered a criminal offense.”
During a 16-day government shutdown in 2013, small business loan approval rates dropped from 50 percent to 44.3 percent at small banks, while approval rates at larger banks fell by nearly 20 percent.
And it’s not just loans that SMBs need to worry about. Small businesses that have been awarded government contracts might see interruptions as a result of the shutdown, which could also prevent federal agencies from approving new contracts.
There is also the matter of consumer confidence, especially for businesses in a region with a high number of government employees. During the 2013 shutdown, there was an estimated 2 to 4 percent fall in spending among government workers, who cut back on eating out and grocery shopping. And retail store traffic fell an average 7.3 percent each week of the shutdown compared with the previous year.
Small businesses, including restaurants, bed-and-breakfasts and boutiques, that operate near the National Parks will also see a decrease in their number of customers.
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