The U.S. Export-Import Bank and the SBA were closed as part of the government shutdown. That means the nation’s small businesses could not get a loan from these institutions.
Last year, the SBA approved 53,000 loans, providing through its flagship 7a and 504 loan programs $30.2 billion in loans to small businesses. If these numbers hold, an average of 150 loans or $93 million were not being processed every day the government shutdown continued, Landrieu said.
“Eighty-eight percent of the Export-Import Bank transactions were from small businesses totaling $6.1 billion. Translate that to $16.7 million a day of lost transactions for small businesses all over America,” she added.
Chuck Withee, president of The Provident Bank, said the SBA’s 7a and 504 loan programs are the “backbone” of his company, which offers loans to small businesses and employs 130 people. He said shuttering the SBA crippled many of these small firms who live “day to day,” often wondering how “they’re gonna keep the lights on.”
Sally Robertson, whose company provides SBA 504 loans to small businesses, pointed out many of the ways in which the SBA closure will affect companies. For instance, she said, many firms entering into contracts to buy fixed assets could lose their deposits if they are unable to meet settlement deadlines because they do not have financing secured.
“The conversation has been going on for months about the shutdown and the debt ceiling. CEOs have been taking that into account for months. They have been making quiet cutbacks, layoffs, and furloughs,” she said. “Our economy has been suffering for months. Our lending activity is down 30 percent from last year.”
Ronald Paul, chairman of Eagle Bancorp Inc., said the trickle-down effect of the shutdown is yet to hit the economy, and the economic recovery will be devastated if Congress continues “kicking the can down the road” by reaching a temporary agreement that delays resolving the country’s fiscal problems.
“What’s gonna happen between now and February, I think, is gonna be equally as ugly as what’s happened over the past couple weeks,” he said.
A Gallup poll released Oct. 4 showed consumer confidence had dropped to its lowest since December 2011 and the Standard and Poor’s (S&P) 500 Index was almost at a one-month low on Oct. 8, but has rebounded since then as lawmakers proceeded to negotiate a deal to end the government shutdown.