January 14, 2019
By Mary Miller
Contributing Editor, Main Street Monday
Main Street Monday – The Government Shutdown and Main Street
As the country enters week three of the partial government shutdown, the stats for the effects on Main Street are sobering.
The shut down of operations in key government branches, specifically the Small Business Administration, has serious consequences for Main Street America.
The SBA ceased processing and issuing new small business loans on December 22, 2018, which means that the funds needed for purchasing new equipment or expanding existing businesses has come to a halt for Main Street.
A recent report released by the House Small Business Committee, highlights these stats:
- A shutdown reduces access to capital for SBA’s 7(a) lending product by $90 million per day. This translates to 192 small businesses per day that cannot access the capital they need to grow and create new jobs.
- A shutdown prevents the disbursement of approximately 117 SBA 504 loans per week, representing a weekly total of over $102 million.
- Previous shutdown data indicates that on a daily basis, a shutdown could cause small firms to forgo approximately 6,875 contract actions worth $301,656,083 million.
- With an estimated 380,000 federal furloughed employees and another 420,000 working without pay all over the country, small firms will lose business and confidence in the economy.
Once our politicians come to a compromise and the government gets back up and running, small business owners and lenders need to be prepared to face the resulting backlog of paperwork, approvals and processing delays in the attempt to obtain, service and liquidate SBA 7(a) and 504 loans.
Throughout 2018, small businesses owners held strong, steady, even rising confidence levels.
Speedy resolution of the partial government shutdown and prevention of a state of emergency is critical to prevent confidence levels for Main Street from bottoming out.
A dip in Main Street confidence levels will be reflected by lower numbers for projected growth, re-investment/expansion of existing small businesses and creation of new jobs.