The government shutdown has frozen millions in Small Business Administration loans, creating immediate threats to small businesses’ cash flow and survival.
The SBA, which works with banks to offer guaranteed loans, said that the shutdown is “stopping an estimated 320 small businesses from accessing $170 million in SBA-guaranteed funding” every day.
Raj Bhaskar, a small business finance expert and CEO of accounting platform Tight.com, says owners must act quickly to avoid a liquidity crisis.
“When the U.S government shut down, small businesses unfairly started to suffer the consequences. In such a situation, even businesses that are profitable on paper can run into a crisis if they lose access to funding or payments,” he said. “Small business owners can’t afford to wait this out. They need a survival plan right now.”
Bhaskar shares some of the key risks for small businesses during the government shutdown:
- Frozen SBA loans: Thousands of small businesses that depend on government-backed financing are cut off from critical capital.
- Stalled contracts: Federal contractors and their suppliers may face delayed or canceled payments, leaving projects in limbo.
- Shaken consumer confidence: With economic uncertainty rising, customers are already pulling back on spending.
To help small businesses minimize the fallout, Bhaskar recommends five urgent survival moves:
1. Stress-test cash flow
Small businesses should forecast their financial runway and determine exactly how long they can cover payroll, rent, and essential expenses without outside funding. This will provide a clear picture of potential gaps before they become crises. Clarity now prevents panic later and helps owners make informed decisions under pressure.
2. Find alternative funding
With SBA loans frozen, small businesses need to explore backup options like fintech lenders, community banks, or supplier-negotiated payment terms. Securing lines of credit before they’re urgently needed gives owners breathing room. Having diverse funding sources ensures stability even when federal support is unavailable.
3. Delay nonessential spending
Preserving liquidity is critical during a shutdown, which means pausing major purchases or delaying projects that aren’t essential to day-to-day operations. Cutting back now creates flexibility for future decisions. This disciplined approach can mean the difference between surviving or running short of cash.
4. Accelerate receivables
Cash flow improves when customers pay faster, so offering early-payment discounts or adjusting invoicing terms will encourage timely payments. Even small shifts in receivables can provide essential liquidity. Every dollar collected sooner will help stabilize your finances during uncertain times.
5. Leverage digital efficiency
Automating accounting, reporting, and forecasting gives owners real-time visibility into their financial health. With embedded accounting tools, platforms can help small businesses make faster, smarter decisions. Efficiency through digital tools reduces dependency on external systems and keeps operations moving despite the shutdown.
“Surviving the shutdown requires more than just cutting costs. It requires decisive, proactive financial moves,” Bhaskar said. “Small businesses that stress-test their cash flow, diversify their funding, and embrace digital efficiency won’t just survive this period of uncertainty but will come out of it more resilient than before.”
Photo credit: Bill Oxford/iStock
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