Government Shutdown, Loans Frozen – What’s a Small Business to Do?

Not only is it ironic but it’s also painful.

Small businesses have expressed hopeful anticipation about business growth in 2019 only to find that their plans for boosting sales have been stymied by the government shutdown that is entering its third week.

The problem for entrepreneurs, start-ups and existing businesses is that the Small Business Administration (SBA) stopped processing new loans on December 22, 2018. Thousands of small businesses can’t get their SBA loans approved, meaning they can’t get money they need to start or expand their companies.

The SBA is a key funding source for small and midsize business. It guarantees about 5,000 loans a month worth $25 billion a year so small businesses can get affordable interest rates. This amounts to a significant stimulus for the country’s economy.

The Washington Post on January 10 cited President Trump as saying the shutdown could last “months or even years,” which is alarming banks and business owners. Consequently, scores of businesses are becoming collateral damage, triggering a domino effect as the shutdown continues and companies that aren’t getting loans or payments are unable to maintain their obligations.

All of this is a major hit to commerce in America that comes on top of the 800,000 federal employees who won’t get paid this week and are struggling to pay their bills.

Economists have usually ignored shutdowns, but there’s concern that the length of this one is starting to hurt business confidence. Fitch Ratings also warned this week that an extended shutdown might damage the country’s Triple-A credit.

So what can small businesses and wannabe business owners to do in this unfavorable business climate?

One hopeful solution is for them to contact their state’s chapter of the American Small Business Development Center (ASBDC) for no-cost consultation and information. In New Jersey, this helpful network is called the New Jersey Small Businesses Development Center (NJSBDC), with headquarters at Rutgers University School of Business in Newark, NJ, and 12 regional centers across the state.

The NJSBDC was one of the first national SBDC pilot projects resulting from the enactment of a congressional law in 1977 and has served small businesses for 40 years. The federal Small Business Administration (SBA) and the State’s Business Action Center (BAC) are key funding partners and higher educational institutions around the state host the regional centers.

According to Vincent Vicari, regional director of the NJSBDC at the Anisfield School of Business at Ramapo College of New Jersey in Mahwah, the center is a valuable resource that small businesses should connect with regularly and especially when times are tough.

“Business owners and entrepreneurs can get expert no-cost advice from expert consultants and attend training to help them better understand how to grow your business. The NJSBDC helps established small business owners and aspiring entrepreneurs to create and expand their business enterprises which will, in turn, result in sustainable growth, job creation and statewide economic development and prosperity,” Vicari observed. “Utilizing this resource empowers entrepreneurs to make better short-term decisions for resource allocation, as well as to develop strategic plans that are aligned to their particular business realities.”

With the government shutdown turning off the funding spigot, small business owners must prepare now for recovering from this calamity.

“Handling a government shutdown, although rare, should be like any other business disruption such as weather, supply interruption and infrastructure cracks. What we work on is what we can control, knowing that prior shutdowns are temporary occurrences. Then we begin a process to serve companies’ customers’ orders for products or services to avoid delivery delays that may not be recoverable if the business fails to deliver on its commitments,” he said.

Vicari is a widely regarded as a hands-on small business advocate. He is known for personally guiding entrepreneurs in acquiring financing for launching their businesses, growing sales and overcoming calamities.

“Small businesses across the United States have an opportunity to respond with deliberate speed, focus, local market sensitivity, passion and drive to embrace market needs and overcome calamities,” he said.

In addition to providing useful advice on financing, the NJSBDC also helps small businesses with these topics:

• Starting a small business
• Buying a business or franchise
• Marketing
• Financing
• Accounting fundamentals
• Developing a business plan
• Website management, e-commerce
• Social media

“We create grassroots economic impact, and help small business secure financing by clarifying the realities of business and banking, assisting them in loan packaging by working directly with SBA lenders, banks, and sources of capital essential for business development, personal growth and economic sustainability with a wide scope of business services,” Vicari pointed out. “The Bergen Country NJSBDC can help small business owners develop a plan that they can take advantage of in a crisis. All you have to do is to register as a client with the NJSBDC to receive all of the no-cost assistance that is available. I have a team of people that can help you and your company wherever in the lifecycle your business happens to be during a crisis.”

In Bergen County, NJ, small businesses can visit this webpage to register as a client: https://clients.njsbdc.com/reg.aspx?mode=counsel&center=21025&subloc=0