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How A Government Shutdown Will Impact Your Small Business

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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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Comments

  1. As a Small Business the potential impact of this shutdown is immense. While it is not nearly as serious as the lack of support our military, veterans and their families, and other vulnerable groups are currently missing out on; it’s not something that get’s all that much coverage in the press either. MLS is fortunate that this shutdown doesn’t impact the bulk of our workforce but we do have some employees who are sidelined due to either the agency or contract funding. Our Politicians need to understand that although federal employees will receive back-pay, while they delay making a decision that should have been done months ago contractors, on T&M contracts not deemed essential, will not. Thus costing them a substantial amount of revenue, revenue they can’t afford to lose, and directly impacting the economy. Considering the push that has been towards getting more small businesses to do work for the government over the years it’s imperative that Politicians take into consideration all of the ramifications shutting down the government has and that no one can really afford it. #supportourvetrans #supportourmilitary #supportsmallbusiness #itdoesntmatterwhobrokeitjustfixit

  2. I totally agree with what you said. I think that government shutdown will just create a bad impact to the businesses. I hope that the government will have a solution for this to avoid it to happen. This article is an eye-opener.

  3. Great article! I think that government shutdown will definitely be able to have a bad impact to the business so I believe that business owner should always be prepared and I hope that the government will be able to avoid it. Thanks for sharing this article.

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