2013 is an interesting year to own and operate a small business. Most of today’s business owners worked through the recession just a few years ago, while those who are younger and new to the role may have been able to bypass this period of negativity. If the government fails to raise the debt ceiling this week, it might not be going overboard to say that the nation’s economy could end up right back where it was during the recession.
Small Business & The News: What the Debt Ceiling Means For You
There is no doubt a wide range of predictions on the table regarding what might happen if the debt ceiling is not raised by October 17th. Some experts believe that repercussions will be non-existent and that the nation will simply move on unscathed. Others, however, feel as if a financial crisis will occur if such a scenario is to pan out – one that affects more than just Americans. The dollar could potentially crash, for example. Interest rates could skyrocket. In the end, not meeting the demands of the debt ceiling would likely prove problematic to small businesses.
For many, it is the fear of the unknown that takes precedent over anything else. The issue of the nation not meeting its obligations is something Americans are not familiar with, and failing to raise the debt ceiling could through the country into a state of anomie. Perhaps more pertinent, however, is the fact that many Americans are unfamiliar with what the debt ceiling even is or how it operates.
Put simply, the debt ceiling represents the amount of money the country can borrow in order to pay obligations. Problems arise when spending begins to creep up on the debt ceiling and eventually surpasses it, which is the issue America faces now. Contrary to popular belief, however, raising the debt ceiling does not cause the country to go further into debt; it is only a borrowing limit, and the debt will exist regardless.
Even though the deadline has yet to come, small businesses are already suffering as a result of the debt ceiling issue. Hiring, for example, is down significantly, as now is a tumultuous time that doesn’t exactly have a clear end in sight. Because of the shutdown, businesses of all kinds are being affected – especially those who are in need of SBA loans at the moment.
There’s no getting around the fact that Americans are unhappy with Congress at the moment. What could potentially result from failing to raise the debt ceiling, however, would be far more disastrous to the country’s economy than it would be worth. It is for this reason that many analysts believe an “eleventh-hour” decision will indeed be made to raise the debt ceiling. This being said, no one expected that the government would actually shut down, and even those who entertained the idea likely didn’t believe it would last this long.
We are in the midst of a “wild west” scenario in America at the moment, and small businesses aren’t quite winning out. If further crises continue to occur, who knows how bad things could get?