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If funding measures do not take effect before October 1, federal agencies will be forced to halt nonessential work and paychecks until the shutdown is lifted, which also goes for the Small Business Administration, responsible for processing new business loans.
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Caution tape blows in the wind on the east front plaza of the US Capitol on Sept 27, 2023 (AFP)
As the government shutdown in the US nears, the White House warned on Friday that small businesses could bear quite the brunt and fall short of over $100 million in critical financing daily this October, with “devastating” consequences.
“Each weekday the government is shut down, hundreds of small businesses would see their 7(a) and 504 loan applications fail to move forward. That means extreme House Republicans would deny more than $100 million in critical financing to American small businesses every day,” the statement read.
More than 10.5 million applications have been filed by Americans wishing to start new small businesses during the first two years of the Biden administration, but the White House suggested that a hold on funding and financing would make it harder to access federal contracting, and prevent them from buying essential equipment and thus prompt them to go for high-interest loans.
This comes as Congress has one working day left to plan out a stopgap funding measure before September 30’s midnight hits to avert a government shutdown.
Read next: US Republicans looking to replace House Speaker McCarthy amid shutdown
If funding measures do not go into effect before October 1, federal agencies will be forced to halt nonessential work and paychecks until the shutdown is lifted, which also goes for the Small Business Administration, responsible for processing new business loans for small businesses.
A government shutdown, should it materialize, would lead to suspending “nonessential” government operations until Congress successfully passes a funding resolution.
This would have far-reaching consequences, affecting millions of federal workers, including over 1.3 million active-duty troops, as highlighted by the White House. Notably, the most recent government shutdown, which transpired from late 2018 to early 2019, extended for a record-setting 34-36 days.
This goes to show that while small businesses will eventually find themselves struggling to attain government funding to sustain, the government itself is torn apart ahead of the shutdown over whether to continue funding Ukraine with billions of dollars or whether to stop it at once.
The White House issued a stark warning this week regarding the potential consequences of a shutdown. The administration estimates that 10,000 children would lose access to Head Start programs (free learning and development services), air traffic controllers and transportation security officers would work without pay, causing travel delays, and food safety inspections by the Food and Drug Administration would also be delayed.
It urged House Republicans to prioritize the well-being of Americans over political games and ideological demands.
Read more: Moody’s warns of credit rating risk in potential US govt shutdown
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