While the sequestration-related budget cuts are no longer front-page news, their impact is only just beginning. One of the agencies that has been impacted is the Small Business Administration, which uses a significant portion of its budget to secure small-business loans. It is very likely that cuts from the sequester will reduce the number of loans that the SBA will be able to guarantee during the remainder of this fiscal year. Since the cuts take place over time, the worst impact will be felt towards late summer when the fiscal year is about to end and budgets dry up.
When the cuts start taking hold, how will the SBA decide which loan applications to fund and which ones to reject? Will the SBA divert funding from non-core programs to their core loan guarantee program? These are questions that remain unanswered. Representative Sam Graves, Chairman of the House Small Business Committee has sent an official request to SBA administrator Karen Mills seeking a response.
The SBA isn’t the only organization that needs a contingency plan due to sequester-related cuts; your company needs one too. Many people are dismissing the cuts as a political tool but they are very real. I know! Our business has been directly impacted by these cuts, which led to the termination of a project because there was no longer a budget to pay the person that managed our work. That’s as real as it gets.
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Photo: Courtesy of SBA