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Shutdown Blocks $2.5 Billion in Small Business Loans, SBA Says
The Small Business Administration (SBA) reported Friday that approximately $2.5 Billion in guaranteed commercial small-business loans have been blocked since the federal government shutdown began earlier this month, affecting around 4,800 businesses, according to an SBA statement published October 21.
The agency noted that an estimated 320 applications per business day, amounting to roughly $170 million in potential loan capital, cannot be processed while the funding lapse continues.
The freeze impacts the SBA’s primary lending programs (7(a) and 504), which rely on federal staff whose operations are curtailed during the shutdown.
California has been hit the hardest, with 212 pending loans worth more than $126 million in value nearing approval each week.
Other states such as Texas, Florida and New York also see hundreds of loan packages stalled, data show.
The SBA said the interruption places Main street businesses at heightened risk of layoffs, reduced hours and missing out on growth or equipment investments.
SBA’s loan programs are currently unavailable because of appropriations delays,” said SBA Administrator Kelly Loeffler. “Thousands of small businesses that depend on this capital now face uncertainty
With the shutdown entering its fourth week, analysts warn continued inertia could slow hiring and expansion across the small-business sector, which accounts for a significant share of U.S. employment.
Observers say the longer the freeze in loan approvals persists, the harder it will be for lenders and borrowers to rebuild momentum once the government reopens.
