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Survey: How small businesses were affected by the government shutdown

Written on Feb 20, 2019

While the government shutdown hit federal workers the hardest, with some 800,000 furloughed or forced to work without pay, U.S. small businesses had to deal with unexpected trickle-down effects that caused disruption and uncertainty.

The clearest problem for small businesses was the dropoff in customers, as many federal workers or contractors — or those with federal workers in their family — were suddenly less willing or less able to spend money.

According to the latest CNBC|SurveyMonkey Small Business Survey, 35% of small business owners nationwide said they experienced a "sales slowdown" attributable to the lack of demand from nearby federal workers. Another 13% reported the "direct loss of revenue from a contract with a government agency."

The survey was conducted by SurveyMonkey from Jan. 28–Feb. 4, polling more than 2,200 small-business owners across the country.

The survey noted that determining the degree of revenue loss is difficult as small businesses span the full range of industries, from mom-and-pop corner stores to restaurants, health care providers and technical consulting firms.

Many small-business owners wrote in as part of the survey to describe the unique ways their businesses were affected. Loss of revenue was a frequent theme. "It has impacted my clients and therefore me" said one small-business owner in Florida. The shutdown "inhibited my sales to government agencies," said another in Texas. A small-business owner in Michigan noted "some government employees [are] not buying packages, because they have more important issues to deal with."

But it's not just revenue loss that has been problematic for small businesses. Some 14% noted "delayed regulatory approval for products or services," and 10% experienced "restricted access to SBA (Small Business Administration) loans."

Some wrote in similar responses having to do with a lack of access to necessary government resources, such as frustration that they couldn't contact the IRS to help with tax preparation or the inability to access E-Verify to screen new employees. One Nebraskan small-business owner noted that her farm loans were impacted, and another in Massachusetts said she couldn't access information she needed from the Library of Congress.

Aside from the direct effects, the shutdown created a general anxiety that affected many, if not most, small-business owners, even those who weren't affected financially.

One small-business owner in California reported the shutdown caused "low morale" at work because one of her employees had a spouse who was directly affected by the shutdown. Many reported a loss in consumer confidence, mental stress affecting their clients, a general sense of fear or uncertainty and deferred decision-making until the shutdown was resolved.

Oftentimes these responses anticipated future revenue losses, but just as often, they reflected a concern on the part of small-business owners for the well-being of their local communities.

Most people in the general public agree that the federal shutdown has had an impact. Nearly half of people (48%) say a government shutdown is a "major concern" for their community, and another 35% say it's a minor concern. Just 14% say it's not a concern at all.