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Tourists walk past the U.S. Capitol as the Congress remains gridlocked over legislation to continue funding the federal government. Small businesses in Southern California could soon feel the pressure if federally backed loans and contracts remain frozen.
Small business has been called the "engine of the economy," but that engine could stall, if loans and contracts are left frozen by the political gridlock in Congress.
Here in Southern California, the Valley Economic Development Center helps small business owners obtain loans, many of them guaranteed by the federal Small Business Administration.
Chief Operating Officer, Warren Cooley told KPCC that on the day before the federal shutdown, the center was scrambling to push through loan applications to the approval stage.
"We got people on both sides of the fence -- people who snuck in and basically got it done and we got people who were in the queue and we can't move further with them in the queue because basically of the shutdown," Cooley said.
He added that while some businesses don't need loans, many do depend on contracts which are funded by the federal government and while those companies should be able to get through a two-week pay cycle, they are likely to feel the pinch, if the shutdown drags on. Cooley said some are sole proprietorships, others have just a handful of employees, but if the payments stop, most don't have a lot of cash on hand to keep operating for very long.
"For a lot of these businesses, it takes one pay cycle," Cooley said, adding "so by the middle of the month, there’s gonna be a pinch felt, and if it goes on longer than that, there’s gonna be a real serious pinch felt," Cooley said.