Federal Contracts: Reliable Revenue for Small Businesses. Until a Shutdown

U.S. Chamber of Commerce
Nov. 5, 2025

For over 80 years, the U.S. government has made it a priority to ensure that America’s small businesses receive a fair proportion of federal contracts.

For many small businesses, federal contracts represent a sizable portion of their overall revenue. Navigating federal contracting rules can be complicated but once done, a federal contract can be a reliable source of revenue.

Until there is a government shutdown.

Their work can immediately come to a halt if funded with lapsed discretionary appropriations. While historically even furloughed federal employees have received back pay when the government reopens, that is not the case for federal contractors providing services to government. This means the longer the government remains shut down, the deeper the hit will be on small business contractors.

Last year, there were at least 65,500 small business contractors located in all 50 states who received over $155 billion in payment for goods and services provided to the federal government. We analyzed data from Bloomberg Government to better understand the scale and scope of the shutdown, which began October 1, on small business contractors.

Our finding? Those 65,500 small business contractors in the United States have nearly $3 billion a week at risk, with $12 billion just in the month of October alone.

The Shutdown Impact in Michigan

Small business contractors in Michigan are suffering during the government shutdown.

The Effect

There are 1,226 small businesses in Michigan that provide goods and services for the federal government. Every week that the federal government is shut down, approximately $30 million in payments to Michigan businesses are at risk. Shutting down the government in October puts $130 million at risk for Michigan small business contractors.