The Devastating Impacts of The Government Shutdown on Small Businesses Are Sequential

Devastating Impacts of The Government Shutdown on Small Businesses Are Sequential

Small business owners and start-ups the engine of the U.S. economy are taking a hit.

I am disappointed that journalists and news commentators have not covered the immediate and irreparable damages faced by small businesses when the SBA is not in operation and government guaranteed loans are not available to lenders..

Most small businesses rely on SBA guaranteed loans for the purchase of inventory, repayment of existing maturing debt, the purchase of equipment and real estate, and working capital. The immediate impact on a business that is not adequately funded is loss of revenue.

The possible sequential losses that may result are:

Evictions

Foreclosures

Employee Layoffs

Unexecuted Leases

Unfunded Contracts

Purchase Orders not Completed

Penalties and Late Fees Incurred

Alternative Interim Financing at High Interest Rates

and

Litigation…Litigation… Litigation

There are many local businesses throughout the nation that had planned on closing loans over the past 20 days. These loans were approved by lenders, subject to SBA loan guarantees under the 7A and 504 programs.

Without the SBA guarantees the loans will not close and the needed funds are not available.

The proceeds of these loans are usually allocated for business operations and expansion; to purchase inventory, meet payroll, hire more employees, fund pending contracts with third parties, and in some cases, repay existing indebtedness that is maturing.

Each day that passes there are more and more small businesses that have loans in process with preferred SBA lenders. The lenders are ready to close, but the loans require an E Tran number from the SBA under the appropriate SBA program.

No E Tran means no loan closing and no available funding for business operations and/or expansion.

The impact of the shutdown on Main Street is being ignored. An extended government shutdown will result in an economic tsunami.

Related articles: 

The Ripple Effect of the Government Shutdown on Small Business

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Marj Weber
Marjorie Weber has been educating entrepreneurs and guiding them in their search for capital for the past 20 years: combining financial literacy workshops with one-on-one mentoring. Marj is currently President of Primed 2 Grow Inc. a company that provides access to capital for both existing and start up enterprises. She has provided term loans and working capital to hundreds of small business in South Florida. She was Chair of SCORE Miami Dade from 2010 to 2014 and served as a financial advisor for SBDC/FIU from 2014 to 2017. She also served as an advisor to the Goldman Sachs 10,000 Small Business Program and the SBA Emerging Leaders Program and provides training for Veterans seeking an entrepreneurial path upon retirement from the service. She has facilitated workshops under the auspices of Miami Bayside Foundation, Little Haiti Cultural Center and several local banks. She commenced her career as a real estate investment banker in New York.