As lawmakers on both sides try to reach a compromise, experts warn if Congress fails to raise the debt ceiling, it could have a dire impact on millions of small business owners.
Congress has until June to reach a deal to raise the debt ceiling, which is the amount of money the government can borrow to pay its bills. The country reached its debt limit weeks ago, but measures taken by the Treasury Department will prevent a default until summer.
"We've actually never not met the debt ceiling deadline,” said Rhett Buttle, founder of Public Private Strategies. “In the past, we've hinted to the point where there have been serious negotiations, but It could have devastating impacts on the economy."
If the U.S. defaults, loans will become more expensive, meaning small business owners will have a harder time getting access to money.
Small business and personal credit card interest rates will also rise, resulting in even more debt.
"It could lead to downward effects where small businesses feel unsure about where the economy is going and make decisions not to hire and that could lead to small businesses not hiring or making decisions that it's not the right time to start a small business in this moment,” Buttle said.
If the U.S. defaults, government benefits like social security, medicare and military salaries also will be at risk.
"For small business owners who are concerned about this, it's really a good time to educate their policymakers, their congresspeople and folks they talk to about the important role debt ceiling plays in the economy and how it impacts them,” Buttle said.