NEWS | Limited Government Shutdown Could Become Reality
- NSBA
- 5 days ago
- 5 min read
Updated: 2 days ago
With a Jan. 30 deadline now expired, Congress is once again dealing with a shutdown as DHS funding negotiations remain stalled.
ANALYSIS | Even a short-lived shutdown comes at a cost for small businesses, as repeated funding lapses erode confidence and disrupt the federal services entrepreneurs rely on to operate and grow.
UPDATE, JAN. 31, 2026 | The federal government entered a partial shutdown early Saturday after the House failed to approve a short-term funding agreement negotiated between President Donald Trump and congressional Democrats. The lapse comes amid heightened political tensions following a national controversy involving the killing of a U.S. citizen by Border Patrol agents in Minneapolis and a subsequent standoff over immigration enforcement policy.
While the shutdown is expected to be brief—with the House scheduled to return from recess on Monday and President Trump signaling full support for the funding package—it marks the second funding failure since the president returned to office last year. For small businesses, even short shutdowns create unnecessary uncertainty, disrupting federal services, slowing approvals, and adding to an already challenging operating environment.
Most Americans may not immediately feel the effects, as many federal employees who work weekends, including military personnel and air traffic controllers, are classified as essential and will continue working. Additionally, several agencies—including the Department of Agriculture, the Justice Department, veterans’ services, and national parks—are already funded through the end of the fiscal year on September 30.
However, several key departments that directly affect small businesses are impacted by the shutdown. According to the White House Office of Management and Budget, agencies undergoing shutdown procedures include the Departments of Treasury, Defense, Homeland Security, Transportation, Health and Human Services, and Labor. Any disruption at these agencies can delay payments, stall regulatory guidance, and complicate compliance for small-business owners nationwide.
OMB Director Russ Vought said the administration hopes the lapse will be short and stands ready to reopen the government as soon as a funding bill is signed into law. If the House passes the measure early Monday, federal operations could resume the same day. It remains unclear whether the Bureau of Labor Statistics will delay the release of its monthly jobs report if the shutdown extends into the week.
The shutdown stems from Democratic opposition to renewing funding for the Department of Homeland Security without additional restrictions on immigration enforcement. Democrats are pushing for requirements such as body cameras for DHS agents, judicial warrants for enforcement actions, prohibitions on masking agents, and limits on broad immigration sweeps. A compromise reached Thursday between President Trump and Senate Democratic Leader Chuck Schumer would fund DHS for two weeks while negotiations continue, with the rest of the government funded through the end of the fiscal year. The Senate approved the agreement Friday.
NSBA has long opposed government shutdowns—regardless of which party is in power—because they consistently harm small businesses. Shutdowns inject uncertainty into the economy, delay government services entrepreneurs rely on, and undermine confidence at a time when small businesses need stability and predictability from Washington.
As lawmakers return to Capitol Hill, NSBA urges Congress to act quickly to reopen the government and prioritize long-term funding solutions that avoid these repeated disruptions to America’s small-business community.
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ANALYSIS | With a Jan. 30 deadline looming, Congress is once again on the brink of a partial government shutdown as DHS funding negotiations stall, threatening delays to SBA programs and broader economic disruption. NSBA has long opposed shutdowns because they consistently and disproportionately harm small businesses through delayed payments, stalled lending, and lost business activity.
JAN. 28, 2026 | What previously seemed like an unlikely scenario, lawmakers are once again facing the reality of another government shutdown unless some agreement is reached by Friday, Jan. 30. In the wake of several controversies related to the Administration’s immigration strategy which spurred Democrats to pull support of any bill funding U.S. Immigration and Customs Enforcement (ICE), some bipartisan will has emerged in the Senate to potentially modify the Department of Homeland Security (DHS) funding bill—where ICE is funded—that is slated for a Senate vote this week. Modifications could include new provisions designed to increase accountability among immigration enforcement officers.
The DHS funding bill is one of the four final appropriations bills that must move through the Senate before being signed into law, following the House's package of corresponding legislation last week. Passage of this final slate of funding bills would complete the appropriations process for fiscal year 2026 (eight funding bills have already passed). Notably, these last funding measures account for the majority of the federal government's operations.
Making any changes to the DHS legislation at this point creates several roadblocks to the bill's passage. The bill is already running up against a tight Jan. 30 funding deadline. If the bill doesn't pass in the next two days, a partial government shutdown will be triggered. Additionally, major changes to the legislation could require the funding package to be sent back to the House before a vote in the Senate. The House is currently out-of-session; lawmakers would have to get back to work in an improbably short amount of time to make this strategy work. Even if the House was able to reconvene, it is unknown whether lawmakers in the lower chamber would be willing to vote reform provisions into the bill.
The first procedural vote on government funding is slated for Thursday; it is highly likely that Senators will be unable to make significant changes to the legislation in time to pass it before the deadline. In absence of a last-minute deal, a partial government shutdown could start as soon as this Friday.
Nonetheless, negotiations are ongoing and there remains bipartisan desire to see the government funded through the year. NSBA echoes the hope that a shutdown—even if partial—can be avoided.
According to an NSBA survey conducted in November 2025, 70 percent of small businesses were impacted by the 2025 shutdown. The most broadly felt impact of the shutdown was a “slowdown in business-to-business purchases”, followed closely by “delayed payments from federal agencies and prime contractors”. Even businesses that don’t contract with the federal government were impacted: 1 in 5 respondents said they experienced a decline in business due to the shutdown.
A targeted shutdown also has negative implications. Programs such as those under the U.S. Small Business Administration (SBA), particularly their lending programs, will begin to experience long delays due to the absence of staff and inevitable backlog of approvals—the last thing businesses need now.
NSBA’s members have—for the past 90 years—seen some significant challenges: the great depression, a world war, a global pandemic and much more. As leaders of our communities, innovators for our country and a major voting block in the U.S.—1 in 4 people in the U.S. run or work for a small business—we feel deeply the sense of unrest and unpredictability that is plaguing cities across the country, especially Minneapolis and St. Paul, but a government shutdown will only bring greater harm and disenfranchisement.
“Small-business owners are engaged and pragmatic and we want all our neighbors to thrive and prosper,” stated NSBA President Todd McCracken. “We also know that two things can be true: the communities and families our small businesses serve deserve better than what’s been happening in Minnesota AND small-business owners suffer under government shutdowns.”
The negotiations in Congress over the spending bills are ongoing and the situation is fast-changing. NSBA will continue to monitor its development and share updates as we get them.
