America's small business owners suffer as shutdown halts popular loan approvals
Sen. Shelley Moore Capito, (R-W.V.), on efforts to reach a compromise on funding for a border wall and end the partial government shutdown.
An ongoing partial government shutdown – the longest in U.S. history – might be starting to take a toll on America’s entrepreneurs.
The Small Business Administration (SBA) is not approving routine loans that it guarantees through its two biggest programs, which ensure business owners have access to needed funds, as first reported by The Wall Street Journal on Thursday. According to estimates provided to the Journal, about $2 billion in small business lending has been delayed as a result of the ongoing shutdown – preventing business owners from doing everything from starting a business to remodeling and expanding.
The political impasse is delaying approvals at a rate of about 300 loans each day, according to The Washington Post.
The SBA doesn’t lend money directly to small businesses, but instead makes it easier and less risky for entrepreneurs to access capital, offering flexible terms and low interest rates. SBA-backed loans are issued by participating lenders, which tend to be banks. The SBA guarantees up to 90 percent of a loan provided by an approved lender. Business owners can typically borrow as much as $5 million.
The SBA did not immediately return FOX Business’ request for comment. An SBA official told the Journal that it is still processing some loans that were approved before the shutdown began on Dec. 22, and that the agency will be able to handle the volume of applications awaiting approval once the government reopens.
But that offers little solace to small business owners facing funding deadlines, as political infighting shows few signs of near-term relief. The longer the situation drags on, the more business owners may be forced to turn to costlier borrowing options or scrap plans altogether, the Journal noted.
The SBA guaranteed more than $30 billion to small businesses that would have otherwise not had access to capital in fiscal 2018, according to the agency.
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The partial government shutdown – triggered by a disagreement over funding for a wall along the country’s southern border – has entered its fourth week, affecting hundreds of thousands of federal employees.
President Trump told reporters this week that he’s prepared to “stay out for a long time if we have to.” Meanwhile, House Speaker Nancy Pelosi asked the president to either postpone the State of the Union address, or submit it in writing, citing security concerns – an indication Democratic leadership is also holding steadfast.