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    How A Government Shutdown Will Impact Your Small Business
    The Vault

    How A Government Shutdown Will Impact Your Small Business

    January 2018

    Will a government shutdown affect small business? Yes, even if you're far outside of Washington, D.C. Read on.


    The federal government could shut down today if Congress can’t come to an agreement on funding legislation and immigration. Though House Republicans voted on a bill Thursday night to keep the government open, the prospects for passage of that bill in the more closely divided Senate look grim. A government shutdown, the first in 4 years, remains a very distinct possibility.

    On the surface, it doesn’t appear that a government shutdown would affect small businesses much at all. Simply put, a “government shutdown” means the government will run out of money from its previous spending budget, and that budget shortfall means government agencies must stop operating. So, if you’re not a government agency, you’re in the clear, right? Wrong. The truth is, government shutdowns are expensive and have far-reaching consequences. Here’s how the upcoming one might impact your business.

    Key government operations will stop.

    Government employees whose roles are deemed “essential” (pertain to national security) will keep working, but others will stop. Services like tax refund distributions, passport issuance, and federal court operations (if the government is closed for more than 10 days) will cease. If the shutdown only lasts a few days, the lack of these services won’t likely be anything more than an annoyance. But if it persists, as the 16-day government shutdown of 2013 or the 17-day shutdown of 1995/’96 did, you could find yourself desperately seeking these services.

    Note that U.S. postal service operations will continue during a shutdown. The postal service has its own funding through stamps and other fees. U.S. air travel/TSA operations will also continue.

    The SBA will stop processing loans.

    If a shutdown occurs, the Small Business Administration will no longer process loan applications. Loans in process will be left in limbo, and that will leave many businesses in a crunch. The SBA is where many small businesses receive their long-term loans. Be sure to reach out to us ASAP if you’re facing a cash crunch so that, together, we can determine a workable solution for you.

    Government contractors will lose money.

    Businesses large and small contract with the federal government and a shutdown means they’ll lose a good source of their revenue stream. The contracts themselves will halt, and payments for work completed will halt until the government employees responsible for issuing checks return to work.

    If you’re a government contractor, reigning in spending will be particularly important for you if the government shuts down. Again, get in touch with us immediately to devise a strategy.

    There will be residual effects.

    With many federal workers temporarily not receiving paychecks, spending could halt in local economies. If a good portion of your business comes from federal workers (you operate near a military base for example), your regular customers won’t be spending as much money during the government shutdown. Considering how you’ll remedy that loss of income is important.

    No one wants a government shutdown, not the president, not Republicans, not Democrats, and certainly not individual American citizens and business owners. All will be negatively impacted. Begin thinking about ways you’ll make it over the hump, so to speak. As always, we’re here to help.

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