Technology

Small businesses accelerate tech adoption amidst prolonged government shutdown

Wednesday, 29 October 2025 5:06AM UTC

As the partial government shutdown surpasses 28 days, small businesses face severe funding and operational challenges, prompting a surge in AI and digital tool adoption to sustain growth and competitiveness amidst urgent policy delays.

As the federal government shutdown extends beyond 28 days, the impact on small businesses continues to intensify, with mounting pressure on U.S. Senators to approve a clean continuing resolution (CR) to reopen government operations without additional conditions or spending demands. The Small Business & Entrepreneurship Council (SBE Council) highlights severe disruptions caused by the shutdown, such as the freezing of the U.S. Small Business Administration’s (SBA) critical loan programs. According to SBE Council President & CEO Karen Kerrigan, roughly 320 small businesses are losing access each day to about $170 million in SBA-backed loans, accumulating over $2.5 billion in blocked capital for nearly 4,800 small businesses. This funding shortfall threatens job creation, business expansion, and local economic recovery efforts. Kerrigan also points out that vital federal services including air traffic control and permitting processes face operational strain, adding uncertainty that undermines Main Street confidence. Small business groups have united to send a pointed letter to all Senators, urging the passage of a clean CR to end crippling economic instability and allow negotiations on outstanding issues like COVID tax credits to proceed through normal appropriation channels. The SBE Council continues advocacy efforts urging constituents to demand their Senators support reopening the government immediately, as further delay risks derailing small business growth and broader economic optimism.

Beyond the urgent financing concerns, small businesses are actively embracing technology and innovation to sustain and accelerate their competitiveness. At the recent 2025 Small Business Innovation Summit, moderated by Kerrigan, leaders from both public and private sectors discussed the transformative role of artificial intelligence (AI) in small business operations. Panelists underscored the importance of fostering collaboration between government and tech innovators to lower barriers to AI adoption and optimize benefits for the small business community. Complementing this dialogue, the SBE Council’s new "Small Business Check Up and Technology Use Survey" reveals robust confidence among small business owners: 84% expressed a positive outlook on their financial performance for 2025 year-end, with 88% already using AI tools that are catalysing competitiveness and growth. Notably, 91% leverage multi-channel marketing strategies encompassing social media, websites, instant messaging, and live events to increase customer reach and sales sophistication.

The survey reveals that AI adoption is no longer marginal but mainstream among small businesses, with an average of nearly five AI-driven tools deployed across activities like business research, content creation, marketing, financial management, and dynamic pricing. Dynamic pricing tools alone have delivered tangible benefits, with over half of users reporting enhanced profit margins and nearly half seeing revenue growth and operational efficiencies. Responsible AI usage is prevalent, with many owners investing in staff training, output verification, and external expertise to ensure compliance and accuracy. Employee engagement with AI is predominantly positive, and many businesses report reallocating time and resources from routine tasks to strategic growth initiatives, evidencing AI's role as a productivity enhancer.

Nevertheless, challenges remain. The survey highlights continuing concerns about inflation, tariffs, and crucially, access to capital and skilled labor. Over half of respondents identified capital constraints as a key limiting factor for growth, while 30% cited labor shortages impacting their operational capacity. Kerrigan stresses that alongside technology investments, policy solutions addressing these foundational barriers are essential to sustain small business vitality.

The prolonged government shutdown exacerbates these difficulties. Analysis from the SBA confirms the scale of blocked loan access, while other reports detail delayed federal contracting and payment flows, compounding cash flow pressures on businesses relying on government projects. Workforce furloughs affect thousands of federal workers and contractors alike, with implications for national security and infrastructure, as well as the wider economy. Treasury estimates place the shutdown’s weekly economic cost as high as $15 billion, jeopardizing ongoing investment momentum, including in AI.

Despite these headwinds, the small business sector’s resilience shines through a combination of strategic tech adoption and adaptive marketing approaches. Platforms like TikTok, increasingly recognised as critical for small business visibility, illustrate the evolving landscape of digital commerce. The holiday shopping season is also poised for strong online performance, with projections signalling increased consumer spending, supporting optimistic revenue outlooks for many small firms.

In sum, while the federal government shutdown imposes immediate and tangible hardships, especially regarding capital access and contractual delays, the small business community is actively leveraging AI and digital tools to fuel innovation and growth. However, without swift Congressional action to reopen government operations cleanly, the risk remains that these technological gains and positive economic indicators will be undermined. Policymakers are urged to prioritise stability to enable small businesses to build on their current momentum, addressing both the legacy challenges and future opportunities facing this vital sector.

📌 Reference Map:

Paragraph 1 – ^[1] (SBE Council), ^[2] (SBA)
Paragraph 2 – ^[1] (SBE Council)
Paragraph 3 – ^[1] (SBE Council)
Paragraph 4 – ^[1] (SBE Council)
Paragraph 5 – ^[1] (SBE Council), ^[5] (US Bank Network), ^[6] (Aventi Enterprises)
Paragraph 6 – ^[1] (SBE Council), ^[3] (AP News), ^[4] (Reuters)
Paragraph 7 – ^[1] (SBE Council), ^[5] (US Bank Network), ^[6] (Aventi Enterprises)
Paragraph 8 – ^[1] (SBE Council), ^[2] (SBA), ^[7] (Time)

Source: Noah Wire Services

More on this

https://sbecouncil.org/2025/10/28/small-business-insider-pressure-builds-to-advance-a-clean-cr-new-small-business-check-up-tech-use-survey/ - Please view link - unable to able to access data
https://www.sba.gov/article/2025/10/21/sba-releases-state-level-analysis-shutdown-impact-small-business-lending - The U.S. Small Business Administration (SBA) released a state-level analysis detailing the impact of the federal government shutdown on small business lending. The analysis revealed that the SBA's core 7(a) and 504 lending programs were frozen, preventing approximately 320 small businesses daily from accessing $170 million in SBA-backed loans. Over the course of the shutdown, this amounted to over $2.5 billion in blocked capital for nearly 4,800 small businesses, hindering their ability to hire, expand, and contribute to local economic growth.
https://apnews.com/article/711fe8811697c850923c939befea2943 - The National Nuclear Security Administration (NNSA) began furloughing 1,400 federal workers due to the ongoing federal government shutdown that commenced on October 1, 2025. Despite these furloughs, nearly 400 critical federal employees and thousands of contractors remained active to maintain national nuclear security. Energy Secretary Chris Wright assured the public that the nuclear stockpile remained secure and emphasized the importance of protecting jobs and continuing essential operations. However, the furloughs were expected to delay testing on commercial nuclear reactors, including small modular reactors.
https://www.reuters.com/world/us/us-investment-boom-is-sustainable-bessent-says-2025-10-15/ - As of October 2025, the ongoing two-week U.S. federal government shutdown was projected to cost the economy up to $15 billion per week in lost economic output, according to an updated estimate from the Treasury Department. Treasury Secretary Scott Bessent initially misstated the cost as $15 billion per day while calling for bipartisan cooperation to end the stalemate. The economic damage, derived from a report by the White House Council of Economic Advisers, was said to be negatively impacting an investment boom, including in areas like artificial intelligence.
https://www.usbanknetwork.com/resources/breaking-news-government-shutdown-halts-sba-lending - As of October 1, 2025, the U.S. Small Business Administration (SBA) halted processing all new loan applications due to the federal government shutdown. This suspension affected various SBA loan programs, including 7(a) loans, 504/CDC loans, and Microloans. The SBA's loan processing systems were offline, and no new SBA loan numbers could be issued until the government reopened. The only exception was for loans that had already received an SBA authorization number before October 1, 2025; in such cases, lenders could still disburse those funds.
https://www.aventienterprises.com/post/how-the-october-2025-government-shutdown-could-affect-small-businesses - The October 2025 U.S. federal government shutdown had significant implications for small businesses. Federal agencies largely halted new solicitations, contract awards, and modifications for nonessential programs, leading to indefinite delays for contractors awaiting bids or proposal evaluations. Businesses dependent on government projects faced revenue freezes, and some agencies issued stop-work orders or suspended activities due to the inability to legally obligate funds without appropriations. Payments for completed work were also delayed, creating cash-flow strains for small businesses operating on tight margins.
https://time.com/7322026/shutdown-federal-workers-furloughed/ - A report by the Congressional Budget Office warned that a looming government shutdown could furlough up to 750,000 federal workers daily, costing about $400 million in lost compensation. The shutdown, set to begin at midnight if lawmakers failed to pass funding legislation, would be the first in nearly seven years and affect virtually the entire federal government. Although 2019 legislation ensures back pay for furloughed employees, the CBO cautioned that delayed paychecks could harm households, dampen consumer spending, and strain local economies.

Noah Fact Check Pro

The draft above was created using the information available at the time the story first emerged. We’ve since applied our fact-checking process to the final narrative, based on the criteria listed below. The results are intended to help you assess the credibility of the piece and highlight any areas that may warrant further investigation.

Freshness check

Score: 8

Notes: The narrative is recent, published on October 28, 2025. The Small Business & Entrepreneurship Council (SBE Council) has previously advocated for a clean continuing resolution (CR) to reopen the government, with statements on September 29, 2025, and September 18, 2025. ([sbecouncil.org](https://sbecouncil.org/2025/09/29/small-business-owners-want-action-on-continuing-resolution-to-keep-the-federal-government-fully-functioning/?utm_source=openai)) The 'Small Business Check Up & Tech Use Survey' is a new addition, indicating an effort to provide updated data. However, the report's reliance on SBE Council's own survey data may limit its freshness score.

Quotes check

Score: 7

Notes: Direct quotes from Karen Kerrigan, SBE Council President & CEO, are used. Similar statements have been made in previous releases, such as on September 29, 2025. ([sbecouncil.org](https://sbecouncil.org/2025/09/29/small-business-owners-want-action-on-continuing-resolution-to-keep-the-federal-government-fully-functioning/?utm_source=openai)) The wording in the current report appears consistent with earlier statements, suggesting potential reuse of content.

Source reliability

Score: 6

Notes: The narrative originates from the SBE Council, a reputable organization advocating for small businesses. However, as the primary source of the survey data, there is a potential for bias. The SBE Council's own survey data may not be independently verified, raising questions about the reliability of the findings.

Plausability check

Score: 7

Notes: The report's claims about the impact of the government shutdown on small businesses align with other sources. For instance, the U.S. Small Business Administration released a state-level analysis on October 21, 2025, detailing the effects of the shutdown on small business lending. ([sba.gov](https://www.sba.gov/article/2025/10/21/sba-releases-state-level-analysis-shutdown-impact-small-business-lending?utm_source=openai)) However, the specific figures presented in the SBE Council's survey, such as 84% of small business owners expressing a positive outlook for 2025 year-end, lack corroboration from independent sources, which raises questions about their accuracy.

Overall assessment

Verdict (FAIL, OPEN, PASS): OPEN

Confidence (LOW, MEDIUM, HIGH): MEDIUM

Summary: The narrative presents recent information on the impact of the government shutdown on small businesses and introduces new survey data. However, the reliance on the SBE Council's own survey data without independent verification, potential reuse of content, and lack of corroboration for specific figures from other reputable sources raise concerns about the report's freshness, originality, and potential disinformation. Further independent verification is recommended to assess the accuracy and reliability of the claims made.

small business
government shutdown
AI adoption