As we all know the Government shutdown is affecting many Americans and it has especially come as a low blow to small businesses, shutting down loans and government contracts just as that sector was somewhat getting back on its feet.
Government Shutdown Small Business Loans
The closure has cut off a major source for small loans just as many businesses are preparing for the Holidays rush. The main reason is the closure of the Small Business Administration. With the government shutdown small business loans are impossible to get from banks and government sources. “The timing for shutdown to happen is extremely bad,” said Mike Kevitch, CEO of SmallBusinessFunding.com, a website that helps small business owners connect with lenders fast and get funding within 48 hours. “This will force small businesses to borrow extremely expensive money they need in preparing for the holiday season. Even when the SBA re-opens, their office is looking at a minimum of 6-8 weeks of backlog – that said, small businesses will not get funds in a timely manner.”
The Debt Ceiling Crisis
Because of the IRS closure, which is the only source of income verification data for banks, the only businesses to even be able to get higher rate loans would be the ones that already have existing relationship with their financial institution. Small businesses will face more hurt after the SBA reopens. As CBS News underlined,
“Under a program that was set to take effect Oct. 1, the SBA was going to waive all guarantee fees for loans below $150,000. The program is part of President Obama’s 2014 budget, which has yet to be passed. When the government reopens it will do so under a resolution that keeps funding at last year’s levels, and no new programs will start until such time that the budget itself is actually passed.”
The debt ceiling deadline is biggest threat to U.S. economy. If and when the US defaults on debt, it will affect financial markets and businesses would suffer and decline.
The Stable Solution
“It shutters the confidence of consumers and small businesses,” Kevitch said. “The only reliable and stable solution for small businesses at this point is to use services like Small Business Funding that connects them with lending partners fast and at the best rates.”