How a government shut down could affect small businesses

4/8/2011

The Democrats and Republicans are currently at odds over the federal budget, and if they don't find some common ground and agree on the financing of government programs, there could be a shut down. This would be devastating to small businesses, as the U.S. Small Business Administration is a government-backed organization, the Wall Street Journal reports.

If the government shuts down, the SBA will no longer be able grant any new commercial loans. Despite the fact that banks and private lenders often fund these loans, the SBA must approve them before they can be issued.

"Some small business owners who are involved in federally contracted work may also be at a loss because agencies will cease federal procurement activities. In other words, no new contracts would be awarded," explains the Wall Street Journal.

Congressional leaders are set to meet later today, April 7th, Thursday but an agreement still appears to be far off. If no compromises are made, the government shutdown will begin at midnight on Friday, April 8.