4th Avenue business owners concerned debt debacle impacting business
Reporter: Steve Nuñez
TUCSON (KGUN9-TV) - Credit rating agencies once again cautioned Congressional lawmakers, there's now a 50% chance that the U.S. will be downgraded from a AAA to a AA rating. With the deadline just three days away, the stalemate between Republicans and Democrats continued over extending the nation's line of credit. The government could lose its power to borrow money and pay its bills on Tuesday night.
Small mom-and-pop business owners along 4th Avenue fear they could be hit the hardest. A downgrade in credit rating means interest rates will rise, people will have less money to spend and fewer customers means shrinking profits.
Bob and Sherry Hyde own Tucson Artistic Gifts.
"We're seeing a lot fewer people down here," said Hyde. "But I have noticed the small things are selling, the low dollar items because they can get something and still be able to buy something but not spend much money."
In the last five years, the small specialty shop also survived the 4th Avenue underpass construction project that closed off part of the street to traffic for 2 1/2 years.
"With the economy our low pricing has been a good thing never realized that was going to happen," said Hyde.
Hyde supports raising the debt ceiling if the government can also reduce its spending. Still, he's concerned the potential for higher interest rates means it'll cost him more to operate his business.
"We've used credit cards to finance our business rather than loans," admitted Hyde.
So with no debt deal from Congress, we asked the Tucson Metro Chamber of Commerce what its doing to advocate for small business owners.
According to Bill Holmes, its Chief Operating Officer, small businesses represent 85% of its membership.
"We are trying to bring a laser focused message to our elected officials so they hear first hand the impact of what they're decisions are going to make," said Holmes.
Holmes agrees Congress must also reduce spending. If not, he said it would make it even harder for banks to provide businesses with the cash it needs.
"So banks are going to have a much more difficult time getting money to lend to the small business owner and if there is money available its going to be very expensive," said Holmes. "But we've got to raise the debt ceiling to get our bills paid and keep our federal workers and social security bills paid, Medicare funded and we've also got to look at the spending and do something very dramatic about that too."
Meanwhile, Hyde and 29 other small business owners are relying on a mass store-to-store sales promotion, and not the government, to increase its summer sales revenues.
"If we can get into a larger store we can expand our selection and hire some people," said Hyde.
30 merchants participated in the sales promotion designed to lure shoppers to 4th Avenue to browse, shop and spend money.