SBA LOANS-LOOMING FEDERAL GOVERNMENT SHUTDOWN
Our federal government is currently funded through September 30th. Unless our elected officials approve a new budget before this date, the government will shut down. The most recent shut down lasted 35 days between 12/22/18 and 1/25/19.
M & A Advisors and Business Brokers need to be proactive about buyer financing activities when a potential federal government shutdown is looming. All hands-on-deck is required to guide your buyer/borrower through the SBA application process to pre-approval with an SBA Preferred Lender. The goal is to receive an SBA Authorization Number before the shutdown. NO Authorization Number-NO Closing. Time Kills Deals.
Whenever a federal government shutdown occurs, the U.S. Small Business Administration (SBA) partially ceases operations, significantly impacting the nation’s financial community and small businesses. The affected SBA operations include new loan processing, existing client and loan portfolio servicing, secondary market-related functions, and technical support, among others.
Processing for most SBA lending programs is put on hold as the agency’s employees are on furlough. Regardless of the loan processing method, no new loans can be approved during this time. Furthermore, requests for commitment changes and increased loan amounts are treated in the same manner as new loans and cannot be processed during a shutdown. Some exclusions to this exist to provide for disaster support to small businesses.
As previously discussed, SBA Preferred Lenders may take certain actions to continue servicing their loan portfolios and customers including those actions that may require notifying the SBA. These actions include processing loan commitments where an SBA Authorization Number has been assigned or for bridge loans during the government shutdown period. Others may require SBA review and further delay the credit process.
The SBA directs several agency employees to manage essential activities during the shutdown period. These publicly named individuals are available to assist lenders with those actions deemed necessary to protect the lender’s and SBA interests, including protection of property.
Plan-ahead and avoid deal busting delays!
September 12, 2019
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