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Shutdowns Hurt Small Businesses


Take Action: Government shutdowns are detrimental to small businesses and the 245,000 federal workers in California. That is why CAMEO will be sending a letter to Senators Dianne Feinstein and Kamala Harris, urging them to support legislation to prevent federal government shutdowns in the future.

Please sign on to the letter and send an email to Daniela Fernandez-Ulen with a ‘yes, include me on the letter to end shutdowns.’

Last Friday, the President signed a measure to reopen the government after being shut down for 35 days. The continuing resolution will fund the government until February 15, during which time the President and Congress will discuss a border security package and a permanent end to the shutdown.

It is estimated that the shutdown cost $11 billion to the American economy, and its effects will continue to be felt for a long time. For small businesses relying on government services to function, the impact could be disastrous. The Small Business Administration closed and was unable to process loans, as were other agencies with whom entrepreneurs interact – including the IRS, Treasury Department, Interior Department, FDA, and the Department of Agriculture.

In a Business Leader Briefing on Monday, Small Business Majority CEO John Arensmeyer called the shutdown a “trifecta of pain for small businesses” because:

  • SBA loans were stalled
  • Government contractors lost money and had to lay off employees
  • Small businesses that serve government contractors and workers were also hurt

And we agree – it’s hard to overestimate the adverse consequences the shutdown is having for the 3.9 million small businesses across the state of California. Cash flow, access to capital, and the inability to collect payments were only a few of the many challenges California businesses faced during this shutdown. The closure of the SBA meant that nationwide about 5,000 business loans were submitted and now need to be processed in addition to the loans that are made this month. With the SBA’s loan processing centers unable to operate, small businesses are estimated to have lost out on $117 million in capital every day. Further, the delay in issuance of grants that assist entrepreneurs resulted in a loss of critical training programs that support thousands of new jobs across California.

In FY18, California companies received $58.2 billion in contracts from the federal government.  Of that contract value, 14.4% came from departments and agencies currently impacted by the shutdown, an amount of $8.4 billion. This impacted hundreds of thousands of federal employees and contractors in California who did not receive pay.  According to a report released by House Small Business Committee Chair Nydia Velazquez, small firms nationally forgo 6,875 contract actions, worth $301 million a day during a shutdown. Given California’s sizeable contracting base, this is a significant impact on our state’s businesses and to the larger U.S. economy.

There are two legislative efforts to end government shutdowns – Senator Rob Portman’s “End Government Shutdowns Act” and the “Stop STUPIDITY Act,” which was introduced by Senator Mark Warner and would put an automatic continuing resolution in place in the event of an appropriations lapse. Keeping the federal government open is vital to the small businesses that support California’s economy.