Much has been said about who has been harmed by the recent government shutdown – the longest shutdown in U.S. history. The shutdown began Dec. 22, 2018 and ended 35 days later. Hundreds of thousands of Federal workers who had missed two paychecks during the partial government shutdown were finally informed they would receive their back pay.
In the midst of the shutdown and in the days after, not much was said about how the partial shutdown affected small businesses. Countless small business owners were also negatively impacted by the shutdown. The following are the top three consequences small businesses felt and are still dealing with now:
While some may be jumping for joy that the Internal Revenue Service (IRS) was closed during the shutdown, it seriously affected those who were awaiting a big tax refund. The agency did announce that it would be paying funds despite the shutdown, but delays were inevitable. The problem is that those who choose to file early are usually counting on large refunds to cover expenses, pay off debt, make purchases and other uses.
For businesses, their most recent tax documents are required to apply for small business financing. This could prove to be devastating for business owners that needed cash for an unexpected opportunity. It likely also affected business owners that needed cash to boost cash flow, pay off debt, purchase new equipment and other first of the year plans.
On top of the IRS being shut down, the doors of the Small Business Administration (SBA) were also closed. This means all loan applications from small businesses came to a screeching halt. In November 2018, the approval rate for small business loans was over 50 percent; this percentage dropped three tenths of a percent in December due to the fact that SBA loan applications were on hold.
As the shutdown continued, the backlog of companies waiting for business funding grew and grew. Unfortunately, even though the partial government shutdown is now over, it will take months to recover and restore the flow of capital to small business owners. Entrepreneurial dreams have been put on hold. Established businesses seeking funding for growth are still waiting.
To make matters worse, federal workers went for weeks without paychecks. Thus, they had less money and flexibility to purchase groceries, buy lunch, purchase clothes, get a haircut, etc. This lack of consumer spending spread across the nation, hurting the bottom line of companies that provide goods and services to government workers.
In short, the government shutdown had a serious domino effect on the economy. Many experts will likely be examining just how much the shutdown affected consumers and small business in the coming months. If your small business has been affected by the recent government shutdown and you are still waiting for financing, you should consider turning to an alternative lender like First American Merchant.
Your business can complete an application in just a few minutes and hear back in as little as 24 hours. Within days, your small business can have the cash it needs to pay off debt, boost cash flow, increase inventory, meet payroll and cover other expenses. If you’ve been affected by the shutdown, don’t let the lingering effects hinder your business’ growth any longer. First American Merchant has a dedicated support team that will help you quickly get your business back on track.