October 1, 2013
By Charles H. Green
It’s October 1 and through failure of Congress to enact a fiscal budget or continuing resolution to authorize federal spending, all parts of the federal government not deemed ‘essential’ have halted effective midnight last night.
According to Bloomberg BusinessWeek’s account about the first federal government shutdown in 17 years, it means that about 800,000 government workers are being furloughed. In addition, funding is suspended for a wide array of services, including contracts that government agencies award to small business owners.
This means that financing for small businesses will be significantly impaired. The Small Business Administration, which guarantees tens of billions in loans for tens of thousands of entrepreneurs annually, has furloughed about 62 percent of its 3,500 workers according to the agency’s response to the threatened shutdown posted (SBA Contingency Plan) on the agency’s website last week.
While the SBA would continue to guarantee existing loans in the event of a shutdown, it would cease backing new loans until Congress passes legislation to fund agency activities. SBA programs to foster international trade, help small firms win government contracts, and assist veteran-owned businesses would also be temporarily shuttered.
SBA lenders have been here before, but this situation is not nearly as disruptive as the annual 7(a) subsidy fights that Congress went through prior to 2004, which shutdown the entire loan program three times in 1995 alone.
Another cost that the naked eye might miss – with all the grandstanding, backstabbing deal making going on to just get an annual budget passed, Congress continues to completely ignore the 504 Refinance extension legislation.