Small businesses across the U.S. face collapse as federal spending cuts slash contracts and delay payments. A Maryland tech firm cut 20% of its workforce after a federal funding freeze left it unable to pay bills, while a Colorado career-development company lost 80% of its revenue overnight.
President Trump’s cost-cutting campaign has eliminated thousands of public sector jobs and now threatens the private sector. Directives to halt all federal funding will make it impossible for small businesses to access critical loans and grants, warned John Arensmeyer of Small Business Majority.
The small business is supposed to be the engine of the economy. My company has been left behind,said Ali Sinan, CEO of Occams Group, which lost $200,000/month from frozen USAID contracts.
Key impacts include:
- Over $14.5M in canceled contracts for Colorado’s Gold Cardinal Consulting
- 36-hour DEI documentation overhauls to save $7M Alaska logistics contracts
- 4.5% of U.S. workforce at risk in government-connected firms
The White House defends its actions, with Press Secretary Karoline Leavitt stating: This administration is committed to cutting waste, fraud and abuse. However, federal judges have twice ruled against the funding pauses, ordering urgent contract reinstatements.
Economist Julia Pollak warns private-sector layoffs from these cuts could accelerate economic decline: There's a degree of worry that extends far beyond federal workers. With $180 billion/year in small business contracts at stake, advocates urge policymakers to balance fiscal restraint with economic stability.
