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Meet some unexpected victims of the Trump shutdown

Rick Newman
Senior Columnist

Zoe Homes OKC isn’t a government agency. It’s a privately owned business. But it’s reeling as much as any unfunded federal department on account of the partial government shutdown.

Zoe Homes arranges lodging for federal workers attending a big Federal Aviation Administration training facility in Oklahoma City. Normally, thousands of attendees are in town for stints ranging from a few weeks to a few months. But now, nobody’s there, because the FAA is unfunded. “It’s all come to a screeching halt,” says Herman Brown, CFO of the family-run operation. “There are about 10 small businesses that participate in this industry in the city, and they’ve all lost from 90% to 98% of their clientele.”

Around 800,000 federal workers are going without pay because of the shutdown that began on Dec. 22. But Congress will almost certainly reinstate their pay once the shutdown ends, as it has after prior shutdowns. For thousands of businesses affected by the shutdown, however, there’s likely to be no reparation. The overall cost to the economy may not be severe, but the shutdown is a direct hit to revenue at many businesses, and it threatens the livelihood of some.

With President Trump and Congressional Democrats dickering over who’s to blame for the shutdown, Yahoo Finance asked its audience for stories of how the shutdown is affecting them. We heard from hundreds of federal workers struggling to make ends meet, as we expected, but also from business owners and entrepreneurs surprised to find themselves at the mercy of Washington politicians.

Herman Brown of Zoe Homes OKC. The government shutdown threatens his lodging company.

Property sales and other deals are being held up because loans backed by agencies such as the Department of Agriculture and the Small Business Administration can’t go through. Researchers can’t get access to government data and taxpayers can’t get needed information from the IRS. A hazmat trucker can’t work because the government agency that needs to renew a key certification is closed. An importer is paying $150 a day for a shipping container stuck at port because the inspecting agency has gone dark. And many travelers report airport glitches, especially when going through customs on the way home from an overseas trip. “If you’re looking for a good opportunity to sneak some contraband through customs, this is a great time to do it,” one flyer told us.

Brown says he might take out personal loans to keep Zoe Homes above water until the shutdown ends. But if it lasts more than a month or so, the company might be finished, leaving his family facing serious financial hardship. The company sublets properties from owners or lessors for 6- to 12-month terms, committing to monthly payments. Then it places FAA trainees in properties as they arrive. But without FAA money, the company has financial obligations without the cash flow to meet them. “The dragon is definitely starting to catch fire,” Brown says.

Joseph Demers is a physicist who owns a southern California company called Bakman Technologies that manufacturers spectrometers for analyzing pollution. He’s developing a drone-mounted version that will fly near pollution sources to check emissions. Last year, he received a $724,000 National Science Foundation grant to further develop the technology. The funding allowed him to move the research out of a garage and into a proper facility. He has lined up one person he’s ready to hire, and would like to bring on at least one more employee.

Joseph Demers of Bakman Technologies with a drone-mounted spectrometer he's developing. The government shutdown has disrupted his research.

But the grant money comes in installments, and the NSF website that processes the transactions is down. So the first hire is on hold and Demers has put off all purchases. “It’s uncomfortable,” Demers says. “I’m pretty sure I can find a short-term loan to overcome a small hiccup. But how long will this go on? I can’t continue to fund the company on loans. I thought the NSF funding was set. I’m surprised not to have access to it.”

For every federal worker struggling to pay rent, there’s a landlord worried about lost income. Retiree Dan Healey of Round Rock, Texas rents a house to a couple near Dallas who are both federal workers affected by the shutdown. They told him in late December they might not be able to pay the January rent, then managed to make the payment. But the February rent will be in jeopardy if the shutdown drags on. Healey makes mortgage payments on the house, and needs the cash flow from rent, so he might have to evict the couple if they miss a couple of payments.

“I’m 80 years old and I’ve never worked for the government, except for being in the army, and now here I am affected by it,” Healey says. “It’s just one of many unintended consequences of this shutdown.” The longer it lasts, the more there will be.

Confidential tip line: rickjnewman@yahoo.com. Click here to get Rick’s stories by email.

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Rick Newman is the author of four books, including “Rebounders: How Winners Pivot from Setback to Success.” Follow him on Twitter: @rickjnewman