SBA 7(a) Loans up to $500k Now Available

Inc.: Why the Government Shutdown Could Pose an ‘Urgent’ Problem for Small Businesses

October 3, 2023 | Ali Donaldson, Staff Reporter, Inc.

Unlike those in years past, this shutdown could have a far more severe impact on business owners applying for SBA loans.

Congress is careening toward a government shutdown–yet again.

Unless lawmakers can reach an agreement to fund the government in the next three days, federal agencies, including the Small Business Administration, will be forced to shutter their offices at midnight on Saturday night. While business owners have dealt with periodic furloughs before, this shutdown could pose a “more urgent” problem for small businesses trying to secure government-backed funding. 
That’s according to Adam Zaabel, executive vice president of credit and underwriting at Newity, who has been fielding calls from uneasy business owners this week. The Chicago-based lender service provider says this shutdown could be different from previous ones because of recent changes the Small Business Administration made to its 7(a) and 504 lending programs.
Lenders used to be responsible for determining whether borrowers were eligible for SBA loans, but since August 1, the SBA has taken up the task of vetting businesses itself. The aim was to expedite the agency’s lending process, especially during a tightening credit environment that has left some entrepreneurs struggling to secure financing. Zaabel says that new SBA-enforced check, which typically takes two to three days, could unintentionally amplify the shutdown’s impact on small-business lending, because companies that are still in the process of getting approved when the shutdown begins will have to wait until after the shutdown ends to be approved. 
“In the past, you had right up until the last hour [before a shutdown] to submit as many loans in your pipeline as possible,” says Zaabel. “Now, there’s a risk if you submit too late.”
That approval delay, Zaabel says, could even extend past the shutdown itself. “It’s just a lot cloudier this time around, in terms of what it’s going to be like post-shutdown, and how fast things are going to start up again,” he says. “We just don’t know until we get there.”
Despite that uncertainty, there are some best practices for navigating a looming government shutdown. Zaabel offered advice for business owners undergoing the SBA loan approval process right now.

Get your documents in order.

Zaabel, who manages Newity’s borrower application process, says the best thing a business owner can do at the moment is to ensure that all the necessary documentation for their SBA loan is complete and with their bank or lender service provider. “That gives the lender some options ahead of the shutdown,” he says.

Don’t wait out the shutdown.

For business owners that have not yet submitted their SBA loan application and are concerned about not having enough time to clear the eligibility threshold before Saturday night, Zaabel says, still submit your application as soon as possible. Even if the federal government is closed, it’s better to keep working on your application and turn it in, rather than waiting for the shutdown to end, he adds. Even though the federal government would be closed and unable to issue new loan numbers, which authorize lenders to disperse and fund SBA loans, financial institutions will still be open for business.

“People hear ‘shutdown,’ and they think we might be pencils down. But for us, it’s really business as usual,” Zaabel says, adding that lenders and service lender providers like Newity can still work on compiling loan applications so that they are ready for the eventual reopening. “You’re going to want to be able to access that capital as soon as possible–as soon as the government starts back up again,” he says. “You don’t [want] to start from scratch or go back to working on your documents that you had set aside.”

Keep making your existing payments.

For borrowers with an existing SBA loan, Zaabel says, remember those payments are still due regardless of whether the federal government shuts down or not. 

Keep your lender informed.

Business owners, Zaabel says, should leverage their relationship with their banker or service lender provider. “Don’t be afraid to communicate,” he says. “It’s our job to be aware of what’s going on. Business owners have enough on their minds, and probably don’t need to add the fear of what’s going on in Washington, D.C., to that list.”

He adds, “We navigate the government mess, so the business owner doesn’t have to.” 


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To qualify for an SBA 7(a) small business loan, your business must be:

  1. U.S.-based and operated
  2. Owner supported / owner funded
  3. Eligible per the SBA’s requirements

Your loan amount will determined by the business’ average annual revenue, FICO score, and years in business