The government has reopened, but the SBA is facing a backlog of loan applications.
We’ve all been there. You leave the office for a few days, and when you come back to work, your inbox and desk are overflowing.
The problem is a little bigger at the U.S. Small Business Administration, which saw the majority of its workforce furloughed during the 16-day government shutdown.
As a result, the agency’s Office of Capital Access is now facing a significant backlog of applications that piled up during the interim. During the furlough, nearly 700 small businesses submitted 7(a) loan applications totaling more than $140 million.
Bad Situation, Relatively Good Timing
The one silver lining in the situation might be the timing of the shutdown.
It began on Oct. 1, and most lenders tried to process as many SBA loan applications as possible in September, which marked the end of the fiscal year, said David C. Long of Heartland Business Loans, which specializes in SBA-backed 504 loans.
“Lenders tend to push things through at the end of the quarter, and some SBA lender goals are based on the federal fiscal year, not a calendar year,” Long said. “We typically see 504 loan volume much lower in October, the first month of new federal fiscal year, than in September.”
SBA numbers show there definitely was a rush of loan activity at the end of September.
“The last day of the fiscal year saw a significant increase in SBA lending—more than six times the agency’s daily average—to support more than $570 million in capital through our flagship 7(a) and 504 loan programs,” the agency said in a statement released just before the shutdown took effect.
Back to Normal, Eventually
It’s not clear exactly how long it will take SBA’s loan approvals to get back to full speed. In similar cases in the past, the agency’s loan-processing staff has worked weekends to catch up, Long said.
Jeanne Hulit, the SBA’s acting administrator, said the agency wants to get back to normal as soon as possible. “While some things may take a little time to get back up and running, our agency is committed to helping small businesses continue to be the economic engine of this economy and are working hard to resume normal operation of our programs,” Hulit wrote in a post on the SBA’s official blog.
