Government shutdown leaves small businesses in limbo

Zach Davis wants to open a second restaurant and is waiting for loan approval, delayed because of the government shutdown. CBS News

(CBS News) SANTA CRUZ, Calif. -- Right across from the beach volleyball courts in Santa Cruz, Calif., Zach Davis is co-owner of the Picnic Basket, a small cafe.

"Business is good," said Davis.

So Davis decided to open another, larger restaurant, and leased 6,000 square feet in the center of town.

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He had some big plans for the space; it will be one of the bigger spots in Santa Cruz.

He hoped to be open by the end of the year, but to do that he was counting on a $500,000 loan from the Small Business Administration (SBA).

Small business owner Zach Davis is affected by the shutdown. CBS News

"We got all the paperwork in and now we wait. The government's closed down," said Davis.

Davis said there is a lot at risk if the closure continues.

"Right now we are paying rent, there are costs that we are incurring on a day-to-day basis that we can't turn off," he said.

Under normal circumstances, the SBA approves about 250 loans a day, totaling more than $90 million.

Without his loan, Davis can't sign contractors to build the restaurant or recruit staff to run it.

"We would like to hire an executive chef and a general manager to help with this project, but we have to keep that on hold until we know where we stand financially," said Davis.

Davis said the shutdown is costing jobs for other people.

"You know, I have a business partner and we have disagreements. But there is no disagreement that would be so serious that we would close the doors of our business to try and figure it out. That would be the death of our business. It just makes no sense to me," he said.

As laid back as life can be here on the beach in Santa Cruz, Davis is in no mood to relax.

He is anxious to get to work on his new restaurant, but he can't do that until the government gets back to work.

  • John Blackstone

    From his base in San Francisco, CBS News correspondent John Blackstone covers breaking stories throughout the West. That often means he is on the scene of wildfires, earthquakes, floods, hurricanes and rumbling volcanoes. He also reports on the high-tech industry in Silicon Valley and on social and economic trends that frequently begin in the West.