By Gloria Larkin
Many of America’s small business owners are, simply put, worried. These entrepreneurs, who employ nearly half of all U.S. private sector workers, are worried about the still looming government shutdown, the ongoing debacle that’s been driven in part by disagreements concerning federal government spending.
The first shutdown was averted late on the night of Sept. 30 when the Senate passed HR 5860, which allocates disaster relief funds but does not include new financial assistance for Ukraine’s ongoing war with Russia. It was signed into law by President Joe Biden and in the process, ensured troops and Department of Defense employees would continue to receive paychecks and not be furloughed.
The numbers from the recent Goldman Sachs 10,000 Small Businesses Voices survey tell more of the story: a whopping 91% of small business owners said it’s crucial for the federal government to avert a shutdown, which almost happened before Biden signed the bill and still could since the can was basically kicked down the road until November 17.
The survey also revealed that 70% of small business owners said their business would be negatively impacted by a shutdown; and of that 70%, 93% believe their revenue would take a hit. In addition, 96% of the respondents also expressed concerns about U.S. spending levels and the national debt.
The worst part of this scenario is that it doesn’t have to be. Small businesses shouldn’t suffer the consequences of Washington dysfunction that would be the root of a government shutdown that would slow the economy, undercut consumer demand and disrupt access to the government resources small businesses depend on.
Other telling data points from survey small business respondents include:
- 67% said their customer demand would go down due to economic uncertainty and instability;
- 24% rely on Small Business Administration services, including loans and support;
- 21% are federal contractors or subcontractors; and
- 21% said their customers are often government employees and their revenue would be impacted.
The best advice for now is for small business owners is to brace for the worst and open access to sources of cash ― savings, investments, home equity or credit ― to avoid layoffs and stay solvent until this issue is settled. And hope for the best.
An 8(a) update
Earlier this year, applications from small businesses seeking entry into the 8(a) Program were temporarily suspended due to a court injunction. However, on Sept. 29, U.S. Small Business Administrator Isabella Casillas Guzman released a statement on the reopening of the applications for the program where she stated: “Though the administration of the 8(a) Program has been impacted by a recent court injunction and order, the program is open for business. In the weeks since the injunction, the SBA has reviewed or recertified thousands of current 8(a) participants through a process consistent with the court’s order. And now the SBA has reopened the 8(a) application to new participants ― ensuring a vast, talented pool of vendors are available to federal agencies.”
Guzman went on to say that “The 8(a) Program has more than a 50-year track record of making contracting with the U.S. government more accessible for thousands of small businesses,” and that “As we await a final ruling, the SBA and Biden-Harris Administration remain committed to supporting the 8(a) Program” and “We will not let attacks from those who seek to take us backward chill our efforts to promote equity…”
The release of her statement came two weeks after businesses that were already 8(a)-certified were concerned about recent action by Ultima Services ― which filed a motion in the U.S. District Court for the Eastern District of Tennessee seeking additional equitable relief in its suit challenging the constitutionality of the Program ― and how it may have impacted their ability to secure new work or keep awarded contracts.
Furthermore many 8(a) contractors are concerned that the program may be permanently suspended.
The motion from Ultima was directed toward obtaining a court order that would enjoin the award, competition, modification or exercise of options on any 8(a) contract where the contractor originally received the rebuttable presumption, regardless of the contractor’s submission of a qualifying social disadvantage narrative.
In the HUBZone
In late September, the SBA announced its plan to strengthen the enforcement of HUBZone regulations. In a press release entitled “U.S. Small Business Administration Acts to Safeguard Integrity of HUBZone Program,” SBA indicated it would be more diligent in overseeing the program and eliminating non-compliant firms.
The release followed a SBA internal investigation resulting from improved processes and compliance controls that revealed multiple firms were misusing the HUBZone program, which is designed to promote economic development in historically underutilized areas. The SBA immediately initiated decertified ineligible firms from the programs, so those who were caught lost access to HUBZone set-aside contracts and all other program benefits.
Now the SBA is taking a closer look at HUBZone-certified employees, their job descriptions and their work to ensure compliance with the program. Key actions include Decertification of Wrongdoers, Proposed Debarment of Wrongdoers, Strengthening of Regulations, Increased Auditing, and Monitoring and Formal Notification.