Small business owners may face additional SBA loan delays if there is a government closure

The government could close for more than 30 hours unless politicians can agree on a funding move before Thursday’s day ends.

The Senate could vote on a spending bill immediately on Wednesday to avoid a shutdown, while the House works to schedule a vote to raise the debt ceiling.

If funding is not approved on time, a government shutdown could begin on Friday, similar to what happened in 2019, 2018 and 2013.

That means federal agencies, including the U.S. Small Business Administration, will close their doors or significantly reduce operations, and SBA loans waiting for approval will be more delayed.

This would be bad timing as the SBA is already on fire for its slow allocation of emergency COVID-19 funding to small business owners. Part of the delay is because the loans require verification from the Internal Revenue Service, which will also be part of a government closure.

Each day counts for business owners who say they only have the funding to last a few more weeks or months after a year with significantly reduced demand, labor shortages and supply chain issues. .

The SBA did not respond to numerous requests asking if it had a government closure plan or advice for loan applicants.

In an SBA form from the close of 2018, the agency told its employees that unless they are except for furlough, they should not perform any official duties.

“Beginning at noon on closing day, employees will no longer be allowed to use SBA email or other federal resources,” the note said.

A closure could affect small business owners, not only those applying for COVID-19 emergency loans but also those in the middle of the debt forgiveness process. on the Paycheck Protection Plan, said Ben Johnston, chief operating officer of the New York -based small. lent business Kapitus. PPP loans offered to small business owners suffering from losses associated with COVID will be forgiven as long as the businesses meet certain criteria.

Businesses that are particularly tight on funds should try to get the services they need from the SBA before Friday, he said. They may also want to seek outside the SBA for help.

“Other lenders can bridge them until after the shutdown,” Johnston said.

Kapitus, which has 325 employees, provided $ 400 million in loans to small businesses in 2020 and is on track to fund more than $ 500 million by 2021. It has approximately 7,000 active small business clients. .

The SBA’s Economic Injury Disaster Loan program, which provides low-interest loans to businesses hurt by the COVID-19 pandemic, has three more months before it closes. The agency approved 3.8 million loans to EIDL worth $ 268.1 billion as of Sept. 23.

But thousands of EIDL debts are stuck in processing, specifically those requesting reconsideration after being turned down for errors, such as a wrong ZIP code or a misspelled business name.

COVID EIDL consultant Trevor Curran said that if a shutdown occurs, loan applicants can do nothing until it is over. They need to be patient unless they want to seek more expensive capital elsewhere, he said.

“The small owners of this business have been waiting months, or more than a year, anyway, so another delay is, simply put, another delay,” he said. “Their other financing options are limited to very expensive short -term employment loans.”

Calling the SBA to try to get an application approved faster is a good idea but not feasible, he said. And, unfortunately, business owners are accustomed to delays, he said.

“People are very worried and upset with [the ongoing delays] that the shutdown is almost a secondary concern, “he said.

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