A US debt default could crush small businesses. So what can we do? | US small business

Qhe US is caring towards a debt crisis the likes of which we haven’t seen since 2011 when Barack Obama faced off against the Tea Party. No one knows for sure if the federal government is going to default on its debt by the end of this month. But if Democrats and Republicans can’t agree on a compromise, it will have an enormous impact on small businesses around the country.

Some 65% of small businesses believe they would be negatively affected by a default, according to a recent report from Goldman Sachs. This is very bad news. Small businesses accounted for 45% of all private-sector jobs in the first quarter of 2022.

The first small businesses that will be affected will be those that contract directly with the federal government. Tens of thousands of small businesses received more than $154bn in federal contracts in the fiscal year 2021 – about 27% of all government contracts spent that year. And this doesn’t include the small businesses that indirectly received funding from larger construction and other firms that get government money and sub-contract out work to them. If Janet Yellen was forced to prioritize interest and debt payments above all else, then these federal contracts would be suspended and the negative cash flow impact on these small firms would be substantial. Let’s remember: almost half of small businesses have less than three months of cash on hand.

Then there are the small businesses that service government properties. A report from the Cato Institute estimates that the federal government owns or leases more than 350,000 buildings and properties around the country. These facilities are a critical revenue source for countless small firms that perform construction, maintenance, security, cleaning, electrical, landscaping and other kinds of services, all of which would potentially be interrupted. The employees who go to these buildings every day rely on neighboring businesses for their lunches, dry cleaning, yoga, happy hours and other products and services. If ordered to stay home, these businesses – already reeling from the number of employees now working remotely – would suffer a significant blow.

Then there are government functions. Individuals and small business owners rely on many areas of the government for services. They’re applying for passports, questioning the IRS, waiting on regulatory approval and loan guarantees from the Small Business Administration. These and many other critical government services could be suspended if funding is re-directed.

These are all the immediate effects of what would happen if the government had to avoid a loan default. The longer-term effects are even more devastating. If the situation persists credit and financial markets will be volatile and banks will be forced to limit financing to only the most secure (and usually) largest of their customers, which means many small businesses seeking loans will either have to wait or be denied. The Goldman Sachs study found that 77% of small business owners they surveyed were already concerned about their ability to get loans.

According to the White House, a default lasting more than three months would cause a significant recession with as many as 8 million people losing their jobs. The stock market – where small businesses park a significant amount of their owners retirement savings and collateral – could collapse.

All of this could not come at a worse time for small businesses. Optimism among business owners – as determined monthly by the National Federation of Independent Businesses – is already at a 10-year low. Bankruptcies are ominously on the rise too, with one research firm reporting a 20% increase in filings from a year ago. An extended shutdown would make these numbers much worse.

If you’re a small business owner, what can you do?

It sounds obvious but it’s a fact that my very best clients are always thinking ahead. So the first thing you should be doing is preparing. A federal default or shutdown may not happen at all, but that doesn’t mean you shouldn’t be ready for such an event by the end of this month.

That means hoarding cash, confirming the availability of your credit (including credit cards) and communicating with your customers, suppliers, employees and partners. No one should be surprised by your actions – like delaying payments – if a shutdown occurs. They should know that this is something you may be forced to do and they should know this well in advance. The more you tell them of your plans the better they can also plan and the more appreciative they will be.

Also, and this is probably no consolation for businesses right now, is to take away an important lesson: diversity is important. If your business depends too much on any one customer (ie the federal government) then once this problem is behind us you should make it a priority to diversify your customer base. Too much dependence on one source of revenue is too big a risk and even the federal government can’t be relied on to pay its bills on time – or at all.

The silver lining in this dangerous, avoidable situation is that it would take time for things to get really, really bad. Although Yellen warns of a default by the end of May, she does have options for at least funding major parts of the government. And quarterly tax payments – expected by mid-June – could help stave off disaster for a while longer. But none of this should stop a business owner from thinking about the consequences now and preparing for this event. Even if we escape this time, given the acrimonious environment in Washington, we shouldn’t be surprised if something like this doesn’t happen again – and soon.

https://scatterhitam-slot.com powergaming88 powergaming88 powergaming88 powergaming88 powergaming88 powergaming88 powergaming88 powergaming88 slot zeus nolimit city sv388 https://pariamantimur.pariamankota.go.id/assets/ https://sipatudia.bpsdm.sumbarprov.go.id/assets/mahjong/ slot jepang http://simokata.tabanankab.go.id/dist/img/thailand/ scatter hitam slot thailand link slot thailand 777 slot powergaming88 slot luar negeri slot gacor maxwin slot gacor hari ini slot gacor terbaru mahjong ways 2 slot thailand jp slot slot bni slot bri slot bsi slot danamon slot gopay slot server korea slot malaysia slot amerika slot rusia fan tan monopoly live lightning roulette mega ball sweet bonanza candyland mega sic bo mega baccarat andar bahar sbobet88 ktm303 slot dubai slot qris powergaming88 Slot Thailand Slot Zeus Pg Soft Starlight Princess Slot Gacor Maxwin Joker123 Sv388 Slot Thailand Slot Thailand Slot Qris slot thailand joker123 mahjong ways 2 888slot slot thailand slot88 sweet bonanza slot jepang slot thailand slot mahjong ways slot qris slot deposit dana slot dana nolimit city slot thailand sv388 slot888 slot kamboja http://labse.ce.undip.ac.id/sejarah/gacorx/ Slot Thailand Starlight Princess Mahjong Ways 2 Slot Maxwin slot thailand akun pro kamboja slot filipina joker123 slot zeus slot88 slot thailand slot mahjong slot megaways NEW SLOT POLA GACOR Slot Server Luar https://mandiri-gacor.angkolatimur.tapselkab.go.id/ jp slot slot ganas https://cheat-gacor.angkolatimur.tapselkab.go.id/ crazy time live slot qris https://sqris.angkolatimur.tapselkab.go.id/ slot akurat slot bca slot bni qris https://pragmaticplay.dharmasatyasarana.co.id/ https://dana.sidamaju.skom.id/ https://joker123.putramuko.co.id/ https://akun-pro-rusia.mariyadl.sch.id/ slot zeus server thailand server hongkong slot ovo slot gopay slot linkaja joker123 nolimit city sv388 starlight princess mahjong ways pg slot slot zeus sv388 idn slot https://joker123.elearningmansatuokit.sch.id/ slot server thailand slot thailand https://slot-thailand.itr.ac.id/ https://pn-watansoppeng.go.id/media/jui/server-thailand/ https://dinkes.hsu.go.id/wp-content/uploads/server-thailand/ ladangtoto nolimit city koi gate sicbo online roulette online lice casino live22 baccarat online nolimit city slot ovo slot gopay pragmati play starlight princess slot pg soft slot mahjong slot zeus sv388 digmaan slot mania slot zeus slot thailand server thailand ying77 slot thailand judi bola live casino sv388 pg soft slot dana mahjong ways slot mania slot x500 ladangtoto slot server kamboja digmaan digmaan slot88 scv388 sabung ayam online slot live casino sicbo online live casino online slot thailand ladangtoto sv388 ladangtoto powergaming88 66kbet powergaming88 slot thailand ladangtoto slot thailand server thailand slot thailand slot thailand slot thailand slot gacor ladangtoto2 ying77 bet server thailand slot thailand ying77 slot88 ladangtoto ladangtoto slot maxwin sv388 sv388 slot gacor 66k bet slot dana sabung ayam inline slot mahjong slot toto slot server thailand slot gacor slot server thailand slot gacor slot thailand situs slot wwg slot slot daftar judi slot online indonesia slot gacor slot mawin slot gacor slot thailand slot gacor slot gacor demo slot pragmatic sv388 slot88 pgsoft Daftar Judi Slot Online Indonesia Paling Gacor di Indonesia Daftar Situs Judi Slot Online SLOT88 lucky neko slot gacor slot88 slot kakek slot maxwin slot thailand Slot Mahjong Ways 2 Mudah Jackpot Paus di PG Soft Hari ini 2023 Lucky Neko Situs Slot Gacor Pgsoft Hari Ini SITUS SABUNG AYAM SV388 ONLINE DAFTAR LINK LOGIN APK AGEN SV388
Scroll to Top