A government shutdown can create uncertainty for small business owners, especially regarding access to SBA financing. Knowing how a shutdown affects SBA loans is essential for planning and decision-making.
Impact on SBA Loan Processing
During a shutdown, many federal agencies, including the Small Business Administration (SBA), may temporarily suspend non-essential operations. This can lead to delays or pauses in processing new SBA loan applications, particularly for applications submitted directly to the SBA or those requiring SBA approval. The full impact depends on the shutdown’s duration, the specific SBA program, and the lender involved.
Are Existing SBA Loans Affected?
Generally, existing SBA loans are unaffected during a shutdown. Borrowers will continue to receive loan servicing, and payments are processed as usual. SBA’s lender support services—such as customer service and loan management—may remain operational, ensuring ongoing management of existing loans. Loans approved but not yet funded are also unlikely to experience delays related to a government shutdown.
Can You Apply for New SBA Financing?
Yes, but with limitations. Many popular SBA loan programs, like the 7(a) and 504 loans, are processed through authorized lenders, not directly by the SBA. These lenders can accept new applications and process loans during a shutdown. However, SBA approval and funding are on hold until the government reopens. This can extend approval timelines and delay funding.
Your Options During a Shutdown
Small business owners should stay informed about shutdown developments and communicate proactively with their lenders. If immediate funding is critical, exploring alternative sources such as private loans, business lines of credit, or term financing can provide relief. Being prepared to reapply once the SBA resumes operations can also speed up the process. Continuously working with your SBA lender on existing applications can position your request for quick approval post-shutdown.
Conclusion
While existing SBA loans generally remain unaffected, new applications may face delays during a government shutdown. Staying informed and exploring alternative financing options are wise steps for small business owners during these uncertain times.