10.4.13: SBA Sidelined by Government Shutdown

It’s October 1 and through failure of Congress to enact a fiscal budget or a continuing resolution to authorize federal spending, all parts of the federal government not deemed “essential” halted operations effective midnight last night.

According to Bloomberg BusinessWeek’s account regarding the first federal government shutdown in 17 years, about 800,000 government workers are being furloughed. In addition, funding is suspended for a wide array of services, including contracts that government agencies award to small business owners.

This means that financing for small businesses will be significantly impaired. The Small Business Administration (SBA), which guarantees tens of billions in loans for tens of thousands of entrepreneurs annually, has furloughed about 62% of its 3,500 workers, according to its response to the threatened shutdown posted on the SBA website last week.

SBA lenders have been here before, but this situation is not nearly as disruptive as the annual 7(a) subsidy fights that Congress went through prior to 2004, which shut down the entire loan program three times in 1995 alone.

“The SBA shutdown is definitely a bummer for us as we have a $5-million SBA 7(a) loan closing in process with our affiliate, Country Bank and we are not sure if we can close the loan because we need the SBA to sign off on the Environmental Site Assessment (ESA) for the project,” commented Jim Brett, the ValueXpress underwriter on the project.

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This entry was posted in Commercial Lending, Commercial Real Estate Loans, Michael D. Sneden, News & Recent Closings, SBA, SBA Loan Processing, SBA Loans, The Banker's Mortgage Conduit, Valuexpress and tagged , , , , , , , . Bookmark the permalink.

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