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How a Government Shutdown Hurts Small Businesses

The U.S. Capitol building in Washington, D.C.
The U.S. Capitol building in Washington, D.C. / Credit: gary718 | Shutterstock

The government shutdown began last week, and that almost instantly created major changes that impacted the business world. The longer it lasts, the more significant damage it will do – and federal employees won't be the only ones suffering. Small businesses will experience a range of issues, from slower hiring to loss of revenue. Here are six ways small businesses could be affected by the government shutdown.

Any small business owner hoping to get approved for a loan from the U.S. Small Business Administration (SBA) has to wait. With the majority of SBA employees on furlough, processing for most of the SBA's lending programs are on hold.

According to the National Association of Government Guaranteed Lenders, "routine actions requiring SBA’s approval cannot be processed." Lenders won't be able to submit loans into an approval queue for SBA processing, and they can't receive 7(a) loan numbers during the shutdown. Therefore, they can't approve loans under their delegated authority.

Employers looking to hire new employees during the shutdown could run into problems. One of the casualties of the shutdown is access to the federal E-verify, an Internet-based system that allows businesses to determine the eligibility of their employees to work in the United States. The issue is having serious implications in states that are required to verify employees' legal status via the program before they are hired.

Additionally, Doug Monro, founder of the global job search engine Adzuna, told The New York Times that many recruiters are holding off on their hiring plans, and many job movers are opting to wait until the government shutdown ends.

While national parks were closed during 2013's government shutdown, Interior Secretary Ryan Zinke said most parks will not be affected, stating that "our public lands and our monuments really belong to the people and not the government."

However, some parks and monuments might still close, which will affect businesses in the area. Because there won't be the typical influx of people, these small businesses won't have as many customers. Most located in and around the country's national parks rely on tourists to survive. Without them, they could see a significant drop in revenue.

As part of the shutdown, many federal employees are locked out of their jobs. Because these workers are not heading to work each day, small companies located near and around federal buildings, like those near national parks and monuments, won't see as much foot traffic. Nowhere is the impact greater than in Washington, D.C., where the majority of the furloughed employees are based.

Small businesses needing help with workplace safety issues will most likely be on their own for the duration of the shutdown. The U.S. Department of Labor's Occupational Safety and Health Administration (OSHA), which is tasked with ensuring safe and healthy working conditions at U.S. businesses, "will send home three-quarters of its staff, and suspend most workplace safety inspections," according to Bloomberg.

Small businesses whose employees are planning international work may have to reschedule those trips if they are still waiting to receive their passports. While the U.S. Department of State still plans to issue passports during the shutdown, delays are expected, especially in cases where passport offices are located in federal buildings that have been closed due to the shutdown.

"The Department will continue as many normal operations as possible," the Guidance on Operations During a Lapse in Appropriations said. "Operating status and available funding will need to be monitored continuously and closely, and planning for a lapse in appropriations must be continued."

Sammi Caramela

Sammi Caramela has always loved words. When she isn't working as a Purch B2B staff writer, she's writing (and furiously editing) her first novel, reading a YA book with a third cup of coffee, or attending local pop-punk concerts. The only time Sammi doesn't play it safe is when she's writing. Reach her by email, or check out her blog at sammisays.org.

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