A majority (70%) of small business owners surveyed said their companies would be negatively impacted if there is a government shutdown, with nearly all of those respondents (93%) citing their revenue as an area that would be dinged by a closure, according to a Goldman Sachs survey released Monday.
Most small businesses anticipate gloomy financial consequences from the potential federal shutdown even though the survey found less than one in four are directly linked to government via their business as based on three different metrics: only 24% of the respondents rely directly on Small Business Administration Services (24%) such as loans or other support, while just 21% were federal contractors or subcontractors or had customers that are government employees who would be impacted.
The data, based on a survey of 1,554 participants in Goldman Sachs 10,000 Small Businesses educational program conducted from Aug. 29 to Sept. 7, was released as time is running out for Congress to avert a government shutdown. Much of the federal government will be shuttered if Republicans and Democrats don’t reach a deal and pass new spending legislation before Oct. 1, with Goldman Sachs analysts saying a shutdown would “shave 0.2 percentage points off annualized GDP growth every week,” according to The Wall Street Journal.
The potential for a government shutdown is emerging as a fresh economic threat despite other studies evidencing that the outlook of CFOs and small businesses is brightening. CFO optimism rebounded in recent months to the highest level since late 2021, according to a Deloitte survey, while a quarterly survey from the U.S. Chamber of Commerce and Metlife found confidence among small businesses hit a post-pandemic high in recent weeks as fears of a recession waned, CFO Dive previously reported.
The Goldman survey’s respondents have participated in Goldman Sachs’ 10,000 Small Businesses, a program that has served more than 14,000 small businesses across the country by teaching entrepreneurs skills in accessing capital and obtaining more business support.
Gloria Larkin, president and CEO of TargetGov — a company based in Linthicum Heights, Maryland, that provides consulting services to organizations which contract with the federal government and an alumna of the Goldman Sachs 10,000 Small Businesses program — called for Congress to find a way to keep the government running.
“Small businesses shouldn’t suffer the consequences of Washington dysfunction,” Larkin said in a statement contained in the release. “A government shutdown would slow the economy, undercut consumer demand, and disrupt access to government resources small businesses depend on. Congress must come together to find a solution.”