TL;DR
When a government shutdown happens, it doesn’t mean the world ends — but it does cause delays, confusion, and red tape for small businesses. Loans pause, contracts freeze, and for those connected to federal programs like EBT, things slow down until the government reopens. At Velocity Merchant Services (VMS), we work directly with the USDA to help small businesses get approved to accept EBT/SNAP — but during the shutdown, those approvals are temporarily paused until the USDA resumes normal operations.
What Is a Government Shutdown, Anyway?
Think of the government like a giant office building. Every year, Congress and the president have to agree on a plan to pay all the bills — salaries, programs, and services.
When they can’t agree, some departments have to turn off the lights and send employees home. That’s called a shutdown.
Not everything stops — important things like national security, mail delivery, and emergency services continue. But a lot of government offices that process applications, review forms, or handle public programs pause their work until funding is approved again.
Why Small Businesses Should Care
Small businesses might not be government entities, but many rely on government programs — loans, permits, certifications, or contracts.
When a shutdown happens, those support systems hit “pause.” That’s why you might notice things taking longer to process or applications sitting in limbo.
How a Shutdown Hurts Small Businesses
1. Loans and Funding Freeze
The Small Business Administration (SBA) is one of the hardest-hit agencies during shutdowns. That means no new SBA loans or approvals until it reopens. For small businesses hoping to expand or refinance, this can be a huge setback.
2. Slow or Stopped Permits and Approvals
Any business that needs federal permits, environmental clearances, or safety approvals will likely face delays. If you’re waiting for paperwork from an agency that’s “closed,” you’re stuck waiting until the lights come back on.
3. IRS and Tax Delays
The IRS operates with limited staff during shutdowns, which can mean slower processing of refunds, delayed responses, and longer hold times. For businesses counting on tax credits or documentation, this can be frustrating.
4. Government Contractors Get Hit Hardest
Businesses that have contracts with the government — or even subcontractors working under them — can see their payments or projects paused.
5. Foot Traffic and Local Demand Drop
Businesses near federal offices, national parks, or government hubs often see fewer customers during a shutdown. When employees are furloughed, they aren’t grabbing lunch or shopping during breaks.
6. Hiring and Verification Issues
The E-Verify system, used to confirm employee eligibility, typically goes offline. That means businesses can’t legally complete the verification process for new hires until it comes back online.
7. Ripple Effect on the Economy
Even if your business isn’t directly tied to the government, others around you might be — and that slowdown can ripple across local economies.
How a Shutdown Might Not Affect You
Essential Services Stay Running
Mail delivery, Social Security payments, and most emergency operations continue during shutdowns. If your business doesn’t rely on direct government funding or programs, you may not notice much difference.
Local Businesses Can Stay Stable
Many businesses, like local shops, restaurants, and service providers, continue business as usual — especially those supported by community customers rather than federal employees.
Short Shutdowns Are Manageable
Most shutdowns last only days or a couple of weeks. When that happens, operations usually bounce back quickly once funding is restored.
How the Shutdown Affects Velocity Merchant Services (VMS) and Our Merchants
At Velocity Merchant Services, we work directly with the U.S. Department of Agriculture (USDA) to help small businesses become SNAP/EBT-authorized retailers. That means when a store, gas station, or market applies through us to accept EBT payments, we submit that application to the USDA for approval.
During a government shutdown, however, the USDA’s Food and Nutrition Service (FNS) — the division that handles these EBT authorizations — temporarily pauses the review and approval process.
What this means for our merchants:
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All EBT applications are on hold until the USDA is back up and running.
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New approvals and license renewals can’t be processed during the shutdown.
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Existing EBT merchants can continue accepting EBT payments as normal, but new applicants will need to wait until operations resume.
So, if you’ve applied through VMS recently and haven’t received your USDA approval yet — don’t worry, nothing is wrong with your application. We’ve already submitted everything, and your file is simply waiting in the USDA queue.
As soon as the government reopens, our team will pick up right where things left off and push those approvals through as fast as possible.
At VMS, we believe in transparency and trust, so we want our merchants to know that these delays are completely out of our control — but we’re monitoring everything closely and will notify you the moment USDA resumes processing.
For more insights like this, keep up with the VMS blog – or check out our YouTube Channel
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