Franchise News
With 40 percent of the governmental workforce on furlough, the United States government shutdown could begin impacting franchises via stalled loans and delayed travel.
As the shutdown of the United States government enters its second day, 40 percent of the governmental workforce remains on furlough, impacting nearly 750,000 federal workers. While the shutdown impacts employees like park rangers, air traffic controllers and TSA agents, it also has an impact on the Small Business Association.
Forced to hit pause on basic lending activities during shutdowns past, the SBA will halt approval on new loans, potentially leaving would-be franchisees in the lurch. While microloans and disaster loans will continue to be serviced, new SBA 7(a) and CDC/504 loans will not.
Borrowers will still remain required to make payments on existing loans despite the shutdown and the SBA will be forced to play catch up once normal operations resume, instituting what it calls its “lapse plan” as a result of the U.S. government shutdown.
Beyond the appropriation of new loans, the government shutdown could impact franchises in other ways, with the potential impact to air travel and tourism growing as the shutdown continues.
The AP reports that about two thirds of National Park Service employees have been furloughed, potentially impacting tourist attractions around the country. On Wednesday, Mississippi’s Vicksburg National Military Park was shut down as October began. Elsewhere, travelers reported roads into New Mexico’s Carlsbad Caverns closed. And, in Philadelphia, the Liberty Bell Center also remains closed.
Such temporary closures could force Americans to alter travel plans, raising the possible impact of the shutdown on franchises like hotels and restaurants, whose business could be impacted.
Airport positions like air traffic control and TSA have been deemed essential. So, for now, air travel has seen minimal impact. However, federal employees work without pay during government shutdowns in the United States.
The last shutdown of the U.S. government began in December of 2018, spanning 35 days while resulting in a reported gross domestic product loss of approximately $3 billion. As that shutdown — the longest in U.S. history — started to linger, some employees began calling in sick, resulting in air travel delays that soon altered travel, upending hotel and restaurant reservations.
With the holiday season approaching, franchises remain forced to ponder the potential impact of the American government shutdown, with the impact to small businesses, tourism, travel and more only beginning to percolate.
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