How the November Pause in SNAP Benefits Affects Small Businesses Pursuing Government Contracts in Michigan

The recent announcement that Supplemental Nutrition Assistance Program (SNAP) benefits may be paused in Michigan this November due to a federal government shutdown poses significant implications not only for residents but also for small businesses seeking opportunities in federal contracting, especially those supplying products or services related to food, nutrition, and retail. Understanding the dynamics behind this pause can help Michigan small businesses better navigate the evolving federal procurement landscape.

Background on SNAP and Its Importance to Michigan Businesses

SNAP, formerly "food stamps," is the largest federal anti-hunger program in the U.S., providing vital food purchasing assistance to nearly 42 million people nationwide, including approximately 1.4 million in Michigan. Around 13% of Michigan households receive SNAP benefits, with many being children, older adults, or individuals with disabilities.

These benefits are provided via Electronic Benefit Transfer (EBT) cards usable at authorized retailers. In Michigan alone, more than 9,700 retailers accept SNAP payments, collectively redeeming over $3.6 billion in 2023. For small businesses engaged in retail, food supply, or service provision connected with SNAP recipients, this is a substantial revenue stream.

Effects of the Federal Shutdown and SNAP Benefit Suspension

The federal government has been experiencing a shutdown since October 1 due to budget impasses. This situation has forced the U.S. Department of Agriculture (USDA) to instruct Michigan’s Department of Health and Human Services (MDHHS) to pause SNAP benefit issuance for November “until further notice.”

Though existing SNAP benefits currently loaded on recipients’ EBT cards remain usable, November’s new benefit issuance is on hold. This interruption could reduce purchasing power for low-income families dependent on SNAP and consequently impact retail businesses that accept EBT.

Implications for Small Businesses Pursuing Government Contracts

1. Cash Flow and Sales Impact for SNAP-Authorized Retailers
   Small businesses that participate as authorized SNAP retailers might see a decline in transactions tied to SNAP benefits during the pause. This could tighten cash flow in November, affecting inventory purchasing decisions and operational expenses.

2. Contracting Opportunities in Food Assistance and Related Services
   Companies specializing in food supply, distribution, and nutrition programs contracting with federal or state agencies under General Services Administration (GSA) schedules or state procurement contracts may experience delays or changes in demand resulting from the SNAP pause.

3. Compliance and Monitoring Federal Program Changes
   Businesses selling to the government under programs linked to SNAP or other federal nutrition initiatives must stay apprised of funding fluctuations and regulatory updates posted on platforms such as SAM.gov. Understanding how government shutdowns affect program continuity is essential to maintaining compliance and adjusting contractual performance expectations.

4. Exploring Alternative or Supplemental Programs
   The temporary suspension of SNAP benefits might increase demand for food bank services and community nutrition initiatives like the Fair Food Network’s Double Up Food Bucks program. Small businesses might find partnership opportunities or contracts related to these or other local programs temporarily bolstered by federal funding gaps.

5. Financial and Operational Planning Amid Uncertainty
   Small businesses should plan cautiously for government contract periods potentially impacted by funding lapses. This includes maintaining sufficient working capital, exploring lines of credit, and being proactive in communication with contracting officers about contract performance and potential government funding interruptions.

Key Actions for Small Businesses

• Register and Monitor SAM.gov for Updates: Federal contracting prospects and notices concerning SNAP and related programs will be posted here. Timely access ensures your business can respond to procurement changes.

• Engage with State Agencies: Maintain contact with MDHHS and Michigan procurement offices to stay informed on SNAP benefit statuses and related contract opportunities.

• Evaluate GSA Schedule Opportunities: Vendors supplying goods or services related to nutrition or retail can assess GSA Schedules for vehicles that may facilitate federal or state contracts less vulnerable to shutdown disruptions.

• Prepare for Compliance: Review contract clauses concerning government shutdowns and contingencies, ensuring your business can adapt to or negotiate performance interruptions.

• Explore Community Partnerships: Identify local food banks and programs like Double Up Food Bucks where your business can contribute or gain business through government or nonprofit collaboration.

Conclusion

While the November pause in SNAP benefits poses immediate challenges for Michigan residents and retailers, it also highlights the importance for small businesses of understanding the federal funding lifecycle, procurement regulations, and program dependencies. Staying informed and adaptable can help small businesses not only weather funding disruptions but also identify emerging opportunities to serve the community and government effectively.

For Michigan small businesses pursuing government contracts, especially those linked to food assistance programs, active engagement with state agencies, ongoing market research, and strategic financial planning are key to navigating such uncertain periods while positioning for growth in federal contracting.

If you are a small business owner affected by these developments or interested in federal contracting opportunities related to SNAP or nutrition programs, consider reaching out to your local Procurement Technical Assistance Center (PTAC) or Michigan’s Department of Health and Human Services for guidance.

GovScout helps small businesses break into federal contracting. We simplify SAM.gov, surface winnable contracts, and give you the insights to grow in the public sector. Learn more at govscout.io.