Small-business owners fear repercussions of government shutdown
Small-business owners, already pressured by inflation and swollen interest rates, are fearful a looming federal government shutdown will further erode growth opportunities and even their ability to survive.
Thin profit margins will be squeezed even more by the volatile economic condi- tions ahead — with forecasts calling for little, if any, effort to lower interest rates over the next year and borrowing terms are predicted to remain rigorous.
Another economic shock produced by a government shutdown is about the last thing small-business owners need, with many noting in a recent survey by Goldman Sachs that growth and innovation will be suffocated if a closure strangles consumer spending.
Throttling small-business growth could have a direct effect on jobs: Small businesses employ nearly half of all private sector workers in the United States and are the first to cut costs and trim staff during economic downturns. The U.S. Chamber of Commerce reports that nearly two of every three new jobs created from 1995-2021 were generated by small businesses, which are defined as companies with fewer than 500 employees.
A shutdown would slow the economy, undercut consumer demand and disrupt access to government resources that small businesses depend on, according to findings by Goldman’s 10,000 Small Businesses program.
Seven out of 10 small-business owners said they would be harmed by a shutdown. And 67% of those predicted customer spending will slow with current economic conditions and 24% rely on lending involving the U.S. Small Business Administration, which would shutter operations. A partial shutdown in 2019 backed up SBA lending.
Moreover, the National Federation of Independent Businesses warns that small companies already are pressured by inflation and spikes in interest rates.
Skyrocketing rates have been accompanied by tighter credit reviews at banks, which are bringing greater scrutiny to loan applications from small businesses.
“The health of the financial system is essential to
small-business operations,” said Holly Wade, executive director of the organization’s research efforts. “While most owners are currently satisfied with their ability to borrow, the escalating cost of financing associated with high interest rates is a significant issue for many.”
More than half of operators surveyed (58%) — who borrowed or tried to borrow — reported high interest rates as their largest complaint in accessing financing.
Nearly one of every three borrowers reported that concerns with collateral requirements were a significant issue in securing funding.
Federal agencies began informing employees that a shutdown was likely over the weekend and that they would stop receiving pay.
GOVERNOR’S QUALITY AWARD WINNERS
Eight Arkansas companies, ranging from an architecture firm to a manufacturer, were awarded Governor’s Quality Awards last month for their commitment to process improvement and quality-control enhancements to strengthen their operations.
Top awards went to Cromwell Architects Engineers of Little Rock; White River Medical Center in Batesville; Sherwood-based Delta Dental of Arkansas; and L’Oreal USA in North Little Rock for efforts to improve quality and also received feedback on their strengths and weaknesses to guide future enhancements.
Challenge awards, which is the starting point for evaluations, were given to Arora of Little Rock; Metropolitan Emergency Medical Services in Little Rock; Manila Healthcare Center in Manila; and Gosnell Health and Rehabilitation of Gosnell.
The recognition process is coordinated by the Arkansas Institute for Performance Excellence, a nonprofit organization affiliated with the Arkansas State Chamber of Commerce. Arkansas Commerce Secretary Hugh McDonald presented the awards.
The goal of the program is to encourage Arkansas organizations to engage in continuous quality improvements to generate performance excellence. The program helps participants solidify their infrastructure with principles developed by the Malcolm Baldridge National Quality Award and uses the Baldridge Excellence Framework, which outlines management improvements to enhance competitiveness.
OPPORTUNITIES FOR SMALL BUSINESSES
Arvest Bank’s Opportunity Fund initiative, a wholly owned, non-bank subsidiary, announced it has loaned $4.4 million to 181 small businesses during the program’s first 12 months.
The Arvest Opportunity Fund began in August in Arkansas and three neighboring states by offering loans, lines of credit and lending-related financial education to small-business customers that fall below existing bank-credit requirements. The program acts as a financial bridge to help companies access traditional bank products and
Nearly one of every three borrowers reported that concerns with collateral requirements were a significant issue in securing funding.
services.
“We’re very proud to have helped so many small businesses gain access to capital,” said Hillis Schild, executive director of the fund. “We believe our approach to investing in people through finance and education is effective in helping our customers achieve their financial goals.”
Applications are submitted through standard lending procedures and companies can agree to have the Arvest Opportunity Fund consider the applicant for funding if the initial submission fails normal underwriting review.
More information is available at arvest.com/opportunity.
BLACK FOUNDERS SUMMIT
Two entrepreneurial support organizations focused on developing and growing Black-owned businesses are hosting a daylong summit Thursday at the Ron Robinson Theater, 100 River Market Ave. in Little Rock.
Organizers, ReMix Ideas and Advancing Black Entrepreneurship, say the summit will focus on enhancing racial equality through entrepreneurship and will provide Black entrepreneurs with insight on loan opportunities, technology and other services available through support organizations like the U.S. Small Business Administration.
Speakers will include representatives from U.S. Bank, Southern Bancorp, the Winthrop Rockefeller Foundation and Heartland Forward.
Details and registration are available at blackfounderssummit.com.