A budget resistance to Congress has left the administration of small businesses not being able to approve new loans. (AP Photo/J. Scott Applewhite)
Copyright 2025 The Associated Press. All rights are maintained
The federal government closed midnight on October 1st, after Congress failed to reach an funding agreement. Republicans and Democrats remain deadlocked whether they will expand the improved Obamacare subsidies scheduled to end at the end of the year.
Basic services continue. Medicare and Medicaid continue to run because they are funded out of annual credit. The army, law enforcement and air traffic control remain in service without paying their people until the closure is over. The postal service remains open after funding itself. Courts and IRS can only work for a limited period before cuts.
Small Business Administration (SBA) is another story. A good rule is applied to the closure: If the government writes checks, it is closed. If the government carries cash, it is open. The body inflation About a quarter of his staff. Approvals for the new 7 (A) and 504 loans-bread and butter programs-are recovered. This means that small businesses cannot receive funding from the government to buy real estate, buy equipment or expand work.
Bob Coleman, publisher of Coleman reportA commercial version for SBA lenders says most banks can work around the disorder for some time. Offers that already have SBA tracking numbers can still be closed once the bureaucracy is completed. Lenders can maintain the recipient, order estimates, and prepare files with the end of the finishing shutdown. But they cannot complete new SBA guarantees until the government is opened. In his words, it is a hassle if the interruption takes a few weeks. Once it pulls in the last 30 days, then it turns into something more serious.
For lenders, the biggest point of pain is new approvals. Banks cannot complete SBA’s guarantees that they have not yet been put on the SBA system. Certified Development Companies processing 504 loans are also overlooked. Even the micro -processes in non -profit organizations stop. The secondary market, where lenders resell guaranteed SBA loans to investors, also lose government support. Normally, the SBA contributes to a third party to handle the flow of payments – the collection from borrowers, passing the funds to investors and simply ensuring that everyone is paid. About half of SBA loans are based on this market to recycle capital, according to Coleman. Without it, Community banks and lenders who could not face stricter balance sheets if no agreement is reached earlier and not later.
What is going on is the loan service – and the demand that those who have loans that support SBA make their payments. Borrowers who will continue to face exclusion or collection. On the part of the supervision, the SBA Credit Credit Credit Office is only in emergency situations. Normally, the fact that banks followed the rules book on estimates, injections of stocks and citizenship controls for borrowers. During an end, the usual tests stop if there is no “imminent loss” that threatens the body’s balance sheet.
The Capital Access Office, which oversees lenders more broadly, sees its revisions mostly dark. In normal times, it sends the teams to do what it is equivalent to bank portfolio controls. The examiners are considering loan files to confirm lenders substantiated collateral, verify payments and examine borrowers against federal lists. If they find problems, the office may require corrections, imposition penalties or in extreme cases pushes to suspend a lender from the program. At present, these reviews are postponed if they are not considered urgent. Coleman says that the result is mostly a backlog – listeners take reprogrammed, not deleted.
This leaves SBA borrowing in a vacuum. Short holidays cause delays, but they do not derail many agreements. If the freeze extends far beyond 30 days, however, the harm compounds. The deadlines slide. Property closing stage. Lenders stuck with loans that cannot sell could address liquidity issues.
Of course Trump SBA accuses Democrats for the deadlock. Democratic leaders accuse the Republicans. What is not for discussion is the cost of a delay in the service: the SBA itself estimates that 320 small businesses and about $ 170 million in funding from SBA will not get out of the door every day of the finish.
More than Forbes
