The government shutdown isn’t affecting only federal employees and taxpayers unable to get in contact with the IRS.Bloomberg Businessweek reported last week that the shutdown is causing headaches for SBA borrowers as well.
The SBA’s daily $93 million in loan guarantees make up a large portion of small business lending, leaving those applying for funding worried about how and when their loans will be processed. 70% of the SBA’s employees are furloughed, and other federal agencies required for the loan approval process are shuttered.
The SBA’s ability to loan may be halted if the government doesn’t reopen so the regularly-scheduled November 13 bond sale can happen. The sale would require closing documents to be in the hands of SBA attorneys by Oct. 17.
If the November bond sale doesn’t happen, short-term loan lenders who bridge the gap between bank approval and SBA funding will feel the pain.
Further complicating matters is the fact that small business owners typically use 504 loans to purchase real estate. If their financing fails to close, they breach their purchase agreements, potentially losing their deposits.
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