Sequester’s threats to small business

    By Adrienne Burke | Small Business

    A 2.7 percent budget cut might seem trivial compared to what many small business owners have had to deal with during the recession. But reports about what such a slash to the federal budget would mean to small business owners are mostly dire. The cut is due March 1 if Congress does not come up with an alternative this week. Here's a roundup of media reports about how the sequester will impact small business:

    According to The New York Times' "You’re the Boss" blog:

    “The sequester would ... scale back programs at the SBA. According to the administration, loan guarantees would be reduced by $902 million, from $22 billion to just over $21 billion. And the agency told the Senate Appropriations Committee that cuts to its counseling programs would force the agency’s partners to turn away at least 33,000 business owners seeking assistance.”

    On a list of "Eight Ways the Sequester Could Ruin Your Life," The Daily Beast offered this warning:

    "Anyone with a small business should fear the sequester, as loan guarantees provided by the Small Business Administration will be cut by up to $902 million. This will place a huge financial burden on small business owners who rely on those loan guarantees to create jobs and keep their operations afloat."

    The Wall Street Journal was less alarmist in its forecast on Friday about “How Federal Spending Would Be Cut Under the Sequester.” It reported that just how government contractors will be affected:

    "is one of the biggest mysteries because it depends on how companies try to absorb the cuts or change their business models. Many defense contractors warn the cuts could hurt their businesses, but many are already seeing their business decline as the military winds down two wars and adjusts to other budget reductions. A range of companies have raised alarms about the potential impact of the sequester, but most say they have no clear sense what the precise impact would be."

    And in its "Sequestration Breakdown: What $1.2 Trillion Looks Like in Small Business Terms," the Washington Post tried to put the cuts, which would amount to that much over a decade if they became permanent, in context by showing what small business could do with that money instead. Pointless exercise, but the Post's bottom line: the slash "may be enough to send the economy back into recession, which would be a nightmare for companies of every size."

    One official who does not seem to be too concerned is Small Business Administration chief Karen Mills. The AP reported on Friday that Mills, who has resigned from the agency but is staying until a successor is named, "doesn't expect operations at the agency to be dramatically affected by automatic federal budget cuts..." and that "Mills also expects little impact on the amount of loans the SBA guarantees." She told AP, "We are not slowing down giving loans to anyone."

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