Most hearings before the Senate Small Business and Entrepreneurship Committee feature a lively debate between business owners with differing opinions on, say, new federal regulations or proposed legislation in Congress.
On Tuesday, there was no debate. Committee Chair Mary Landrieu (D-La.) called a hearing to discuss the impact of the government shutdown, and the message from every entrepreneur in the room was the same: It is crippling their companies.
“We’re now on day 15 of a government shutdown, and unfortunately, we’re only two days away of the possibility of the United States signaling to the world that we will not pay our bills,” Landrieu said to open the hearing, which was organized by Senate Democrats. She added that the stalemate in Congress “is stopping a lot of economic work in our nation.”
A number of small-business owners in her state have felt the ripple effects of the shutdown, Landrieu said. One entrepreneur, for instance, had planned to purchase and expand a cafe in Donaldsonville, La. However, he could not get the final loan approval he needed from the Small Business Administration before the agency closed, and his acquisition and hiring plans are now on hold.
It became clear during the hearing that he is not alone. A handful of small employers from various sectors, including technology, tourism and manufacturing, explained in turn how their firms have been stymied by the shutdown, many of them offering harsh words for the officials they elected to represent them in Congress.
Here’s what they had to say.
Sabrina Poole, chief executive of SERDI in Gaithersburg, Md.
Poole’s company provides information-technology consulting services to federal and state government clients, and her revenues are down 25 percent since the shutdown, due largely to work stoppages at the Department of Agriculture, the Internal Revenue Service and Federal Aviation Administration. Now, she said she is having trouble managing the one large contract she still has up and running with the Defense Department.
“We’ve had to lay off billable and non-billable staff, which means that the current contract that we do have that has not had a stop order, we do not have anyone to oversee the contract,” Poole said during the hearing. “Compared to large companies, we don’t have deep pockets where we can keep people on the payroll.”
If the shutdown ends this week, she says it will likely take her a year to recoup all the losses and get back on track. If it continues for several more weeks, the damage could be far worse.
“I’m really concerned that I will be forced to close my business if a resolution is not reached quickly,” Poole said, later calling the gridlock in Washington “disturbing.”
“We have sacrificed, struggled and slowly made progress as a woman-owned small business, and the shutdown threatens to destroy all our progress, wiping away a decade of sacrifice,” she added.
Keith Griffall, chief executive of TL Technologies in Salt Lake City, Utah
“It would be pretty hard to overstate the adverse economic effects this shutdown of the government and the national parks have had on small businesses and entire communities,” said Griffall, whose firm operates group travel tours all across the western United States.
It is not just the tour-operating firms, he said, but gift shops, restaurants and hotels that have all been hit hard by the closed signs hanging at the entrance to the nation’s 59 national parks. In total, the U.S. Tourism Association has estimated the shutdown is costing tourism firms approximately $152 million per day.
“They are suffering, and many of their workers will not see the money come back. Those waiters, for example, they are not going to get back pay,” Griffal said. “It’s just one more devastating blow to small businesses throughout America.”
Antwayne Ford, chief executive of Enlightened, Inc. in Washington, D.C.
Enlighten is a cybersecurity and information technology consulting firm that services the federal government, and due to halted contracts, Ford says he has been “forced to say goodbye to some his best and brightest employees.”
“We were forced to immediately furlough two employees due to a loss of work at the Department of Justice, and we have had to furlough 25 more in the 14 days since October 1,” he said. Even those not yet affected, he added, “live in real danger of losing their jobs, meanwhile, they watch their elected representatives battle one another in a war of uncompromising positions.”
Once the shutdown ends, he worries it will be harder to attract talented individuals to come work in a contracting sector that appears less and less stable. In addition, if the shutdown lasts too long, he says he is worried the company could lose its most important contract with the Office of Personnel Management.
“If it is stopped, Enlightened would not be able to recover. It could be the death blow for the company,” he said. We cannot wait and wait as our government leaders in Congress negotiate out livelihoods,” Ford said.
Chris Leh, president of TL Technologies in Lancaster, Pa.
Leh’s company, which manufactures small metal parts and was expecting to double in size next year, was in the process of securing a SBA-backed loan to expand when the government shut down. TL Technologies will not be able to get the final approval it needs from the agency until it reopens.
“We cannot proceed with the purchasing of our equipment, we had to stop about $600,000 dollars worth of equipment from moving, we idled riggers, electricians and employees,” he said, adding that the company was forced to rescind job offers to two highly-educated machinists in the past two weeks. “We are completely and absolutely in a stall mode at this point.”
In addition, he is worried interest rates may rise while he is waiting on that final signature from the SBA.
“Everything I have worked for my entire life is behind that loan,” Leh said, noting that a mere one-percentage-point increase in rates over the life of his loan would cost him $76,000. “That’s an employee right there, or that’s me not being able to keep my house.”
Joaneane Smith, chief executive of Global Commerce & Services in New Orleans, La.
Smith’s cybersecurity and information technology firm received a stop-work order two weeks ago from one of its primary customers, the U.S. Department of Agriculture, as a result of the government shutdown. Right now, she cannot get updates or advice from her contracting officers inside the agency or the U.S. Small Business Administration officials, as each of those offices has been temporarily shuttered.
Her company’s monthly payroll runs about $33,000, with another $3,800 required to cover insurance costs. She has only $60,000 in payroll reserves.
“Another two weeks of the furlough will make it tough for us to continue paying our employees who are not billable at this time,” Smith said during the hearing. “Another three or four weeks, and we will definitely have to have our own furlough.”
Lisa Firestone, chief executive of Managed Care Advisors in Bethesda, Md.
MCA helps public- and private-sector clients manage their employee benefits and worker compensation programs. The the “company has been thrown into turmoil since the government shutdown,” Firestone said.
“The new staff we have hired cannot complete their security clearances, so we have been forced to carry them longer than anticipated,” she explained. “New hires have also been held up because the E-Verify system is not operational due to the shutdown.”
Her company’s line of credit may last as little as 60 days, she said. After that, she says, the company could run into serious problems.
“We are not interested in assigning blame,” Firestone added. “We just want a solution.”