Black Businesses Slammed By Government Shutdown

by Jeffrey McKinney

October 18, 2025

Contract and payment delays are among the largest setbacks hitting Black and other minority businesses amid the federal government shutdown.

Black- and other minority-owned businesses are being slammed by the federal government shutdown, severely hindering their operating ability.

Started on Oct. 1, the closure is on pace to be one of the longest in U.S. history. A new survey of those firms by the National Minority Supplier Development Council (NMSDC) shows they are being negatively impacted by economic weakness stemming from the shutdown.

Simultaneously, the stoppage is projected to bring losses of between $400 million and $450 million for minority business enterprises (MBEs), despite when the government reopens, based on a new calculation by Creative Investment Research.

That overall estimate includes $150 million in contract and payment delays, $125 million in reduced demand for business goods and services, $75 million in staffing reductions including layoffs, and $50 million from increased short-term borrowing costs for the enterprises.

One of the nation’s largest business advocacy groups for MBEs, the NMSDC got 89 responses from its member firms from 26  states and jurisdictions that it quizzed over two days this month.

Don Cravins, interim president and CEO of NMSDC, stated by email, “The numbers tell a painful truth. Within our network of 15,000 minority-owned businesses, more than a third are being directly hit by this shutdown.”

He stated further, “In just three weeks, these firms have lost nearly a quarter of their revenue–translating into hundreds of millions in economic losses. Behind every data point are real entrepreneurs, real employees, and real families. We can’t afford to treat minority-owned or small businesses as afterthoughts–they are essential to America’s strength and recovery.”

The latest survey comes as observers have surmised the shutdown could extend into November as legislators negotiate to end the stalemate.

 In general, federal government shutdowns are bad news for small businesses (SMBs). And those firms with existing contracts from federal agencies are reportedly among the hardest hit during a shutdown.

Kelly Loeffler, administrator of the U.S. Small Business Administration, a vital lender to SMBs, stated the federal agency has halted guaranteeing loans as the government shutdown continues. It has been estimated that 320 small businesses are ceasing to obtain $170 million in SBA-guaranteed funding  daily amidst the shutdown.

William Michael Cunningham, an economist and owner of Creative Investment Research, shared with BLACK ENTERPRISE says that he believes that the survey response rate was relatively small because of the apprehension many minority business owners feel about taking a stand on any issue now.

Moreover, he declared the losses are permanent and significant. He says the survey he helped NMSDC compile showed nearly 33% of respondents experiencing contract delays, almost 34% payment interruptions, and 37% a steady decrease in services. Operationally, almost 32% reported delayed projects or deliveries, and about the same amount have had to adjust cash flow or payment schedules.

The NMSDC survey included MBEs confidentially reporting everything from having “about $1.6 million in outstanding accounts receivable tied to government contracts” to having “to take out business cash advance loans to make payroll.”

On adjusting, one stated, “We have shifted our focus onto State opportunities which are in fiscal spending windows with funding already approved.” Another expressed, “Trying to find more private opportunities or using lending funds to purchase clients from competitors who may reduce services.”

Cunningham says while not every Black or minority firm relies on federal government contracts for revenue generation, many do.

Cravins concluded, “The findings give us a clear direction. “Our members are not asking for charity—they are asking for stronger connections. We will be expanding our work to facilitate intra-MBE partnerships, financing, and new digital platforms that make that collaboration easier.” 

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