Get PJ Media on your Apple

Small-Business Owners Shaken by Government Shutdown

The trickle-down effect to those relying on SBA loans to tourism operators.

by
Rodrigo Sermeño

Bio

October 18, 2013 - 11:30 pm
<- Prev  Page 2 of 2   View as Single Page

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.

(Thumbnail on PJM homepage based on a modified Shutterstock.com image.)

<- Prev  Page 2 of 2   View as Single Page
Rodrigo is a freelance writer living in Washington, D.C.

Comments are closed.

Top Rated Comments   
Obama made the decisions to close down these programs and parks that hurt small businesses, all to keep Obamacare, another industry destroying government program. Go blame him. And if you think 11 days of lost SBA loans hurts the economy, wait until people are dinged an extra 12k a year for their new "affordable" healthcare that they can no longer spend on other things, like houses and cars and appliances.

And there is no economic recovery happening. That's another lie.
39 weeks ago
39 weeks ago Link To Comment
More political theater from the Democrats. Note they don't hold Obama responsible for shutting the parks, especially the parks that didn't need to be shut. And if you rely on gov't for your cheese, you are at their whim. SO don't be surprised when you get caught up in it.
39 weeks ago
39 weeks ago Link To Comment
So, you relied on the FedGov for support, a FedGov headed by that thug Obama, and you are screwed by the shutdown? Well, what the heck did you expect?
39 weeks ago
39 weeks ago Link To Comment
All Comments   (13)
All Comments   (13)
Sort: Newest Oldest Top Rated
my best friend's step-aunt makes $68/hr on the internet. She has been fired for 8 months but last month her pay was $16664 just working on the internet for a few hours. read this post here....www.Bay95.com
39 weeks ago
39 weeks ago Link To Comment
my roomate's sister-in-law makes $75 every hour on the laptop. She has been out of work for 6 months but last month her paycheck was $20467 just working on the laptop for a few hours. >>>>>>>> http://xurl.es/7nkyz
39 weeks ago
39 weeks ago Link To Comment
my best friend's ex-wife makes $85/hour on the internet. She has been fired from work for ten months but last month her check was $12227 just working on the internet for a few hours. More Help.....WWW.Rush64.COM
39 weeks ago
39 weeks ago Link To Comment
Locally a woman was complaining that her mortgage business was dried up because of the 'shutdown'. My response to her was the same as my response to people who seek SBA loans; if the Federal government didn't have its tentacles wrapped around every aspect of our financial services (in addition to every OTHER aspect of our lives) your businesses would not be affected by a bunch of worthless politicians having a spat. WHY have we allowed the government to control so much? Why depend on them for your livelihood? And what the heck will happen once you depend on them for your medical care? What will you do when the Feds close the hospitals because they're fighting about their power and their budget?
39 weeks ago
39 weeks ago Link To Comment
These people are no friends of small business. They are working as hard as they can to impose State Capitalism. They are concentrating capital in fewer hands. Of course they view the SBA as nonessential, just as do they view the small business owners.
39 weeks ago
39 weeks ago Link To Comment
Mary Landrieu? Would that be the same Mary Landrieu who was talking partisan garbage the Saturday before Katrina hit, instead of using TV time to urge the people to evacuate? In a sane world she would have been kicked out of politics after Katrina.

Now her guy in the White House hand picks who should be hurt by the shutdown, and she finds the victims to parade before a committee. Excuse me while I don't shed tears.
39 weeks ago
39 weeks ago Link To Comment
Obama made the decisions to close down these programs and parks that hurt small businesses, all to keep Obamacare, another industry destroying government program. Go blame him. And if you think 11 days of lost SBA loans hurts the economy, wait until people are dinged an extra 12k a year for their new "affordable" healthcare that they can no longer spend on other things, like houses and cars and appliances.

And there is no economic recovery happening. That's another lie.
39 weeks ago
39 weeks ago Link To Comment
More political theater from the Democrats. Note they don't hold Obama responsible for shutting the parks, especially the parks that didn't need to be shut. And if you rely on gov't for your cheese, you are at their whim. SO don't be surprised when you get caught up in it.
39 weeks ago
39 weeks ago Link To Comment
And this is how tyrannies are created. The conversion of folks switching to what can I do to improve my position in life to what's in it for me...the "inafor's" that David Feintech wrote about.
39 weeks ago
39 weeks ago Link To Comment
Let's see I am a small business owner (this is hypothetical) who saw a business opportunity in DC because of a combination of a concentration of Federal employees and tourists. I used my own capital. Now due to the actions of [generic] politicians I have lost a substantial amount of business. So according to you I should have invested in a less profitable business?
39 weeks ago
39 weeks ago Link To Comment
Business comes with risk. Did you not factor risk into your (hypothetical) business plan?
39 weeks ago
39 weeks ago Link To Comment
Since long government shutdowns have been a black swan event you can't factor in the risk. If this happens more often then you can. It sounds like you would like to restrict people from opening businesses in areas where there is a large federal workforce.
39 weeks ago
39 weeks ago Link To Comment
So, you relied on the FedGov for support, a FedGov headed by that thug Obama, and you are screwed by the shutdown? Well, what the heck did you expect?
39 weeks ago
39 weeks ago Link To Comment
View All