WalletHub’s Report. Click on image to read more.
According to analysis by personal-finance site WalletHub,Virginia, Alaska, Alabama, District of Columbia and Maine are the five states most affected by the shutdown.
In the past couple of years, the small businesses in the states listed above have had the highest rates of borrowing when it comes to SBA-guaranteed loans, according to WalletHub’s research. All but two of the SBA’s loan programs are indefinitely suspended during the shutdown, including the most popular loan programs like the 504 or 7a. The 504 loan supports the purchase of land or the construction or improvement of facilities, while the 7a loan provides for long-term and short-term working capital, as well as the purchase of equipment or the renovation of facilities.
Kelly Manning, the director of the Colorado Small Business Development Center, which guides small-business owners through the process of securing SBA loans, says she’s surprised to hear that Colorado is one of the top states when it comes to SBA-guaranteed loans. However, she agrees that the SBA shutdown is “hugely disruptive” to small-business owners who are counting on SBA-backed loans.
“They’re currently looking for alternatives,” says Manning. “Everything’s on hold. They can’t grow their businesses or expand, and they may have to let people go who may have been kept on thanks to working capital … This may put them out of business.”
It’s interesting to note that even this study was affected by the government shutdown, as key federal data sources – including the Census Bureau and the Small Business Administration – have been disrupted due to a lack of manpower. WalletHub was nevertheless able to garner enough information from other public data sources to analyze each state and the District of Columbia in terms of the following seven metrics.
WalletHub senior analyst John Kiernan says small businesses dependent on a strong real-estate market are also seeing the effects of the shutdown, as the mortgage process is tied up. Additionally, he says small businesses located in communities with many federal employees are also likely to take a hit, as furloughed staffers cut back on spending.
“No one is immune to the effects — some states are more affected due to the nature of their population,” says Kiernan.