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Upcoming defense cuts may affect small businesses

Sep 26, 2012 Quinn Thomas

A new study by the Aerospace Industries Association shows that the upcoming defense budget cuts scheduled for January may cause massive job and revenue loss for small businesses, with as many as 956,000 jobs lost to sequestration, 520,000 of those coming from defense-related industries. Firms affected by the cuts may rely on short term lending to maintain stable operations or continue existing expansion plans. Mark Gross, CEO of Raleigh-based Oak Grove technologies, said Thursday during a House Small Business Committee hearing that the uncertainty of the next few months is forcing some small businesses to put revenue-building actions on hold, according to the Washington Post. "Without reasonable assurances of future business, small businesses cannot plan for the future and are not likely to invest in the company's growth by acquiring additional equipment, facilities or personnel," said Gross. He later added that marketing campaigns and trade show participation may also be stymied, suggesting that many small businesses may not be expanding their client base at this time. One reason why some smaller firms are at risk during future cuts is that U.S. aerospace and defense programs rely on small businesses for supplies. The state of Virginia in particular is expected to be hit hard by the cuts, set to lose up to 65,000 defense-related jobs, according to the AIA study. Many firms may turn to short term lenders at this time to hold themselves over until business continues as usual.