Government Contractors May See Tough Times Ahead

The US Government has a number of programs that are designed to help small businesses sell to the government itself. These are great because the US Government is a great customer, a steady payer and more importantly, a customer that buys goods and services even during recessions. On the other hand, we have all seen the recent debt ceiling discussions that emphasized that government must cut back their expenditures. This may be a tough awakening for many entrepreneurs. Here is a link to the WSJ article about government belt tightening.

 

How much of this will affect small businesses - that's hard to say. However, one has to keep in mind that small business grow is needed if the economy is to start adding jobs. Recent small business optimism numbers are not very encouraging so my personal belief is that - if possible - government should minimize any changes to the small business programs.

Many purchase order financing companies do business with government contractors. Obviously, they stand to feel a squeeze in their revenues if the government reduces their help programs to small government contractors. This may also affect conventional factoring companies because many of them offer factoring to government contractors. It's hard to say how it will play out.