A recent report showed that small businesses could lose up to 1 million jobs in 2013 if Congress is unable to avoid the $1.2 trillion in spending cuts due to begin taking effect in January, Reuters reported.

An analysis conducted by Aerospace Industries Association (AIA) showed that if the budget cuts take effect, small businesses with fewer than 500 employees could lose 956,181 jobs, or 45 percent, of the 2.14 million job losses expected across the country.

“Sequestration would reduce our overall budget, forcing us to reduce purchases from businesses both large and small,” Mike McCord, principal deputy undersecretary of defense, said during a hearing with the House Small Business Committee. “9.4 percent less money means we would in general buy 9.4 percent less of everything.”

For the past year, defense industry executives have said the cuts made to the Pentagon would break thousands of contracts and result in billions of dollars in termination fees and other contract adjustments.

Cuts would be very difficult for small and medium-sized suppliers, they say, adding that many suppliers build one product or part for larger contractors. In 2011, small businesses made up 20 percent of prime contracts awarded by the Pentagon and 35 percent of subcontracts, AIA said.