Small businesses feel pain of prolonged partial government shutdown

Maryland senators Ben Cardin and Chris Van Hollen and Delali Dzirasa, founder and president of Baltimore technology firm Fearless, took part in a discussion Thursday with area business owners about difficulties they're facing during the partial federal government shutdown.
Maryland senators Ben Cardin and Chris Van Hollen and Delali Dzirasa, founder and president of Baltimore technology firm Fearless, took part in a discussion Thursday with area business owners about difficulties they're facing during the partial federal government shutdown. (Lorraine Mirabella/The Baltimore Sun)

Local small-business owners are feeling the pain of the federal government’s partial shutdown, as some face delayed payments on government contracts and others wonder how they’ll pay subcontractors or when or if approvals will come through on much-needed government-backed business loans.

Those were some of the scenarios laid out Thursday by a group of area businesses, including federal contractors, who met with Maryland senators Ben Cardin and Chris Van Hollen in Baltimore to talk about difficulties they’re facing as the shutdown dragged into its 27th day.


The shutdown was caused by a dispute between President Donald Trump and Congress over funding for a wall on the Mexican border, one of Trump’s campaign promises.

One of the more unusual stories came from Paul Reed Smith, founder and owner of Stevensville-based PRS Guitars, considered a top maker of guitars and amplifiers.

Now in its 18th day, the partial government shutdown affects one-quarter of the government and about 800,000 employees who are furloughed or working without pay. But the longer the shutdown drags on, the greater the impact not only on federal workers, but on people relying on services they provide.

Smith, one of several dozen people gathered at the offices of Baltimore technology company Fearless at the Inner Harbor, told the senators that people might not realize the wide-ranging impact of the shutdown, and how it even extends to makers of musical instruments. About half of the electric guitars made in the United States are exported, he said, and before they can be shipped out they require permits approved by U.S. Fish and Wildlife Service, part of the Department of the Interior.

During the shutdown, no permits are being approved.

“I have an unusual story,” Smith said. “Half my business is exports, and I can’t get my permits from Fish and Wildlife because they’re shut down. … In about 20 days, half of our businesses are going to shut down.”

Smith, who employs 330 people at the Stevensville factory, said his company’s situation shows how missing something as simple or routine as those permits can pose serious threats to a business. Permits have been required for the export and import of musical instrument made with certain species of wood, including rosewood, commonly used in guitars, as part of regulations that took effect about two years ago.


“It’s not just us,” he said. “It’s the whole industry. This is affecting the export trade. … It’s an odd story, but you’re collecting stories.”

As a partial shutdown of the federal government continues, the state of Maryland could soon miss out on collecting federal employees' state payroll taxes. State Comptroller Peter Franchot’s office estimates that 172,000 Marylanders are affected by the shutdown, including federal workers.

Cardin and Van Hollen, both Democrats, met with business owners after getting a letter last week from a partner at Fearless detailing its difficulties amid the shutdown.

Delali Dzirasa, Fearless’ founder and president, said if the software development firm can’t get paid on its government contracts, it can’t hire subcontractors and vendors, who in turn divert workers to other jobs. That could cause long delays on projects, he said. The firm does work for the Department of Health and Human Services, the General Services Administration, the Small Business Administration and other agencies.

“This is day 27 of this extremely dangerous, outrageous and unnecessary partial government shutdown,” Cardin told the group, adding that having 800,000 government workers furloughed or working without pay has compromised food and airline safety and the ability for people to get a mortgage. “Senator Van Hollen and I every day have been taking steps to re-open government.”

Small businesses have been hurt on two fronts, he said, lacking access to services at agencies such as Small Business Administration and losing business as federal workers cut their personal spending.

“The only way we will put an end to this shameful episode is when our colleagues in the United States Senate understand the damage that’s being done to people throughout the country and the economy,” Van Hollen said.

Leaders of the National Governors Association are urging President Donald Trump and congressional leaders to end the partial government shutdown, telling them,

Keith Deaven, CEO of Mediabarn, an Arlington, Va., web designer, consultancy and placement service, has a contract with the Internal Revenue Service.

“The person pressing the ‘pay’ button is on furlough, and we’re not able to get paid,” and some of those workers have been forced to take out personal loans, he said.

Lisa A. Wolff, president of Next Phase Solutions and Services in Columbia, said she is counting the shutdown in hours not days. The women-owned federal contractor does work for agencies such as National Oceanic and Atmospheric Administration, which awarded the firm a contract to analyze radio frequency interference and assess the impact of data loss.

“Between all of our contracts, we are $3.5 million in the hole, waiting to be paid,” she said. “They can’t process payments.”

The delayed payments are affecting about 1,000 people, including her own employees and employees of eight subcontractors who work for them, she said.

“It’s a ripple affect in the community,” she said. “There are people who are not even paying tuition payments for college because they know we’re going to have to make hard decisions.”

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