Will the Government Shutdown Hit Minority Owned Small Businesses Harder?
The government shutdown currently underway threatens the slow economic recovery that has been progressing since the Great Recession. Small businesses, which are among the main drivers of job creation in the US, have been put in hot water by the failure of the government to compromise and reach a budget decision. All government programs considered to be non-essential for the safety and order of the nation have been put on hold, meaning that the many small businesses that have contracts with the government will be unable to be paid and resume their contracts until after the budgeting issues are resolved and congress can reach an agreement. Another large problem for small business is the temporary closure of the Small Business Administration, or SBA. A quote from Representative Donald Payne, Jr. (D-NJ) featured in a recent story on thegrio.com warns of the problems a lack of SBA operations could represent for minority entrepreneurs, stating, “Black businesses are impacted at a higher number than the general population.” With an increased level of due diligence on the part of traditional lenders in the wake of the negative economy, many business owners have found it exceedingly difficult to apply for capital without backing from the SBA, minority and female entrepreneurs having a statistically tougher time. The governmental programs that would normally aid in the search for expansion capital through traditional business loans being frozen, alternative forms of financing such as merchant cash advance are assuming a increasingly important role as reliable alternatives to business loans, with less stringent requirements for application.
The last government shutdown in 95-96′ lasted for almost a whole month. Hopefully, this one will be able to be resolved in a much more expedited manner, for the sake of small business owners and the public at large who rely on the many “non-essential” agencies of the government for their livelihoods.
Photo Credit to Elvert Barnes on Flickr