It’s a snowy day in Washington. The Federal Government is closed. The House and Senate both agreed to wrap up work early and flee DC before the snow hit (the House won’t return until March 16). So it seems appropriate to highlight the snowball effects of continued GSP expiration.
The following comes from an email we received a few days ago from a small business owner in New Jersey. It’s been broken up into key points, but the italicized sections are direct quotes and represent the entire (unedited) email.
The big picture: “The longer the non-renewal goes on, the harder it will be to ever fully recover from the permanent damage this extended expiration is doing to the sustainable business model we once had as a small business.”
Increasing costs and decreasing credit: “With the full effects of the ACA and Dodd Frank taking hold, costs for employing workers keep increasing and small businesses can’t get access to the credit that they used to. Add 20 months of GSP tariffs on top of that and small businesses run the risk of losing their lines of credit if they can’t meet their sales numbers (because they can’t compete from countries that no longer benefit from GSP) and can’t just transition their business into another country or another vendor instantaneously.”
The snowball effects: “The trickle down effect is this- you don’t meet your sales numbers, you don’t have the [Accounts/Receivable], you don’t get to borrow the same amount of money, you slowly lose your credit line, then your bank wants to get rid of you because you’re now “non-performing” and now your company has to cut back even further. Lay off more people, cut back more expenses or delay capital expenditures, etc. Small business owners might stop taking salaries and those cuts start trickling down into household budgets.”
What every Member of Congress should know: “Non-renewal of GSP is not a one-off that Congress can just pick up and say 20 months later that it’s now FIXED. It will take years to actually FIX the damage that they have inflicted on a whole class of entrepreneurs from this fiasco.”
All the talk from Members of Congress about helping small businesses and encouraging entrepreneurship makes that last line worth repeating (over and over and over): “It will take years to actually FIX the damage that they have inflicted on a whole class of entrepreneurs from this fiasco.”
Congress can’t fix the damage, but it can help companies start the multi-year rebuilding process. When the snow melts and Congress returns to DC, it should start the process by passing an immediate, retroactive GSP renewal bill.
