Partial Government Shutdown Impacts Small Business Administration

This holiday season has proven to be drama-filled one for Washington as a partial federal government shut down is currently in effect. The move comes after Congress and the President were unable to reach a budget deal, with border wall funding proving to the be the crux of the dispute. While that battle may not directly impact the vast majority of small business owners, one way the shutdown is reaching entrepreneurs is via the temporary closure of the Small Business Administration.

In a post shared on the SBA’s official Facebook page, they wrote “Due to the lapse of government funding, SBA will remain inactive until further notice. We apologize for any inconveniences and we look forward to assisting you when we return.” Interestingly, in a document answering some frequently asked questions about the furlough, the administration even warns employees, “Use of Federal resources while on furlough status is prohibited by law and is considered a criminal offense.” The document also details which SBA employees are expected to the furlough, including those working with the Office of Disaster Assistance (ODA) on disaster recovery efforts.

With many SBA workers on furlough, USA Today notes that the review of loan applications will be halted. Depending on how long the shutdown lasts, that added processing time could hurt entrepreneurs in need of capital for their businesses. What’s more Forbes recalls that small business loan approval rates fell sharply in 2013 following a 16-day government shutdown.

While some government shutdowns have come and gone within a few days, various factors suggest this one could be different. For one the timing, which places the shutdown in the heart of the holiday season, makes convening Congress all the more difficult. Additionally, while he showed some signs of wavering initially, the President has seemingly doubled down on his demands, making a deal all the more unlikely. Finally it should also be noted that the start of the shutdown came as Republicans controlled the House of Representatives, Senate, and Presidency, while Democrats will gain control of the House come January 3rd.

Because of all these factors, small business owners in need of loans may need to begin considering other options. No one can say for sure what may happen with the current shut down (or, with short-term fixes looking to be the best option at the moment, when another might occur) but the furloughing of SBA employees means current applicants will have to wait longer for funds while new applicants must wait to even submit. With all that said hopefully this latest shutdown will be a brief one and the impact to small business owners will be minimal.

Author

Jonathan Dyer

I'm a small town guy living in Los Angeles looking to make solid financial decisions. I write for a number of finance websites, including HuffingtonPost and Business2Community. I founded DyerNews.com in 2015 to focus on personal finance and the emerging FinTech markets.

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