Agencies that Deal with Business Adapt to Shutdown
YOUNGSTOWN, Ohio – Because of the federal government shutdown that began Tuesday, about a half dozen local applications for loans from a U.S. Small Business Administration program are in a holding pattern, reports the executive director of the Mahoning Valley Economic Development Corp.
MVEDC, in Liberty Township, administers three federal loan programs for the region including the 504 program that provides second-position loans for fixed-asset projects. “It is rather unique. It is a program that has been in effect for about 30 years,” said Mike Conway, MVEDC executive director.
As of now, all of MVEDC’s 504 loan applications are on hold because of the standoff between Republicans and Democrats. “We have probably half a dozen loan applications that we are processing that will be on hold and held here until this issue is resolved,” Conway said. “So those are five or six businesses that won’t be receiving capital on anticipated projects.”
With unemployment at 11 million, for the loan program to be shut down “will have a direct impact on job-creation activities and also have a direct impact on the future success of many businesses,” he remarked.
Guidance MVEDC has received from the federal government indicates officials expect the standoff to be a “short-term problem” and they hope that the issue will be quickly resolved. In the meantime, MVEDC continues to process applications.
Bill Oliver, business consultant with the Ohio Small Business Development Center at Youngstown State University, reported he was advised by email yesterday morning that the SBA would not be working as of noon. The center is funded by SBA as well as the Ohio Development Services Agency, and provides business counseling and training programs to small businesses in the tri-county area.
In the email, the SBA also reported that the Cleveland office had shut down and all appointments and activities during October would be canceled. From media reports, Oliver said, he has learned that all SBA’s activity would be slowed, including loan guarantees the center processes. “We’re assuming that will crate a backlog, which means that things will be impacted to some degree,” he said.
The office sees eight to 10 businesses per day, but that won’t be affected by the shutdown, Oliver said. “We work on a grant from the government and we haven’t been directed to stop what we’re doing in any way,” he said.
One direct impact of the shutdown on the YSU SBDC is rescheduling the graduation ceremony for the Emerging Leaders program, which was to take place later this month. “We’ve been advised that that will be rescheduled for a later date. When that will be were not sure at this moment,” Oliver said.
The Youngstown chapter of Score – formerly Service Corps of Retired Executives -- which operates out of the SBDC offices at YSU, receives just a small amount of funding from SBA, said Steve Spencer, chapter chairman. Score provides advisory and mentoring services to existing businesses and startups.
“This is a minor glitch. We’ve run into it before,” Spencer remarked. “The impact will be minimal to small businesses hopefully, but we are still available to provide advice and counsel.”
“The idea is, from a business standpoint, ‘Is this really the way to run government?’ We don’t think so,” remarked Tony Paglia, vice president for government and media affairs at the Youngstown/Warren Regional Chamber. There is a time and place to debate policy, “but when it comes down to shutting down the government, this just doesn’t make a whole lot of sense to us,” he said.
The business community’s chief concern is uncertainty, Paglia said. “Businesses don’t like uncertainty. The economy doesn’t like uncertainty,” he said. “We really don’t know how far-reaching this will be.”
Among area firms that could be directly affected are 50 to 60 companies that do defense contract work, Paglia said, and how the shutdown could affect them is uncertain, especially if it lasts for an extended period.
So far, the Eastgate Regional Council of Governments, which administers federal funds for area infrastructure projects, has not been affected in the shutdown nor had the agency received any notification from the federal government as of midmorning Tuesday, said Kathleen Rodi, Eastgate director of transportation. “A lot of our funding has already been authorized through the Federal Highway [Administration] and set into accounts for draw downs,” she said.
Once thresholds are reached in the accounts and they require replenishment, “then that may be a different circumstance,” she added.
At the National Additive Manufacturing Innovation Institute, established just over a year ago, the shutdown is not having an effect on operations, said spokesman Scott Deutsch. Most of the projects going on are under contract and in place, he reported.
However, many of the agencies NAMII works with are being affected, requiring “heightened sensitivity” on NAMII’s part to the issues they face, he acknowledged. That includes determining whether certain meetings can be accomplished using web or phone conference rather than in person.
“It’s just kind of a sad thing that we have to deal with,” he remarked.
Copyright 2013 The Business Journal, Youngstown, Ohio.
CLICK HERE to subscribe to our free daily email headlines and to our twice-monthly print edition.