The U.S. government shutdown is impacting more than the 800,000 workers who will not be seeing a paycheck today. Small business entrepreneurs from around the country who had plans to obtain Small Business Administration (SBA) loans are having to make adjustments to the surprisingly long federal government shutdown, which is entering its 20th day. The shutdown started on December 22nd, and since that time no SBA loan applications have been processed. Some small businesses that were counting on SBA funding to expand or not layoff employees due to capital constraints now face the real possibility of scrapping those plans or layoff workers if a resolution in Washington does not manifest soon. Currently, the SBA processes around 5,000 loans a month.
Farmers and rural businesses are taking a hit too as the United States Department of Agriculture (USDA) is also not processing loan applications for its very popular USDA loan program. Larger companies seeking capital though initial public offerings (IPOs) are also paying a heavy price from the shutdown, as the Security and Exchange Commission (SEC) has also furloughed workers so there are no IPOs at the moment, cutting off a critical source of capital for some of America’s fastest growing companies. The Washington Post reported yesterday that J.P. Morgan estimates that the U.S. economy is losing $1.5 billion a week due to the government shutdown.
Even when the government reopens, there will be a backlog in the capital markets so entrepreneurs are advised to make short-term contingency plans even if the government opens today.