Government Shutdown: Small Contractors to Suffer

WASHINGTON (TheStreet) - Todd Flemming, President & CEO of Infrasafe and a member of the Small Business & Entrepreneurship Council, is one of many small federal contractors who worries how a government shutdown could affect his business.

About 90% of the work done by the nine-year-old company, through its Advantor Systems Corp. subsidiary, which provides electronic security products and services, is for government work, primarily for the U.S. Department of Defense.

Small firm government contractors will likely suffer if the shutdown occurs.

Flemming worries how long it would take the government to pay the company for work already done if it came down to a standstill on the budget.

"It's very unlikely that we would get paid on a timely basis," he says. "That's obviously a problem with respect to cash flow. On top of that we're still expected to report to the bases to perform those services -- which we'll do, of course -- and pay [our] employees."

Republicans and Democrats are in a heated battle over spending and have until 12 a.m. Saturday to agree to a budget. Congress is basically at a standstill right now over certain issues such as environmental issues. If they cannot agree the U.S. government would effectively shut down, with the exception of critical functions, until a budget is set. According to media reports on Thursday the House of Representatives passed a stopgap measure to push the shutdown back a week as well as additional spending cuts.

The last government shutdown was approximately 15 years ago.

The National Small Business Administration says SBA loan applications would be put on hold, and SBA assistance programs would not be available, according to Molly Brogan, the NSBA's vice president of public affairs.

Money could also be held up for any federal research and development projects, and tax assistance unavailable.

"With April 18 nearing, that could be an issue for the millions of pass-through entities in the U.S.," Brogan writes in an email.

>>Government Shutdown Could Derail Recovery

According to the Small Business Administration, about 2% of all small businesses (3% of employer businesses), or roughly 500 million, have sales of 10% or more with the federal government.

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