Downtown Fresno SBA district office via interiorintervention.blogspot.com

The federal government shutdown has frozen Small Business Administration lending, delaying new loans and reviews.

According to the SBA plan for “a Lapse in Appropriations,” all non-excepted employees will be furloughed without pay until further notification by the agency.

SBA offices must notify grantees, lenders, co-sponsors and other agency resource of the lapse in funding.

A quarter of the SBA workforce has been furloughed — 1,456 workers out of 6,201.

Cen Cal Business Finance Group, a Fresno based non-profit organization assisting banks and non-bank lenders, is an SBA lender.

Executive Director Frank Gallegos said local small business owners feel the impact because organizations like the SBA’s SCORE and other advisory services are dark.

SBA lenders are not able to fund loans that are approved, Gallegos said.

“We are signing loan docs or deals for November, and because there is nobody allowed to work at the SBA, they may be held up depending on how long the shutdown goes,” Gallegos. “If it goes a couple of days it won’t affect November stuff, but if it goes beyond this weekend deals get pushed back another month.”

Gallegos said funding will be delayed and borrowers must pay an extension fee to their lenders or seek a bridge loan from a bank.

Either way, it will cost small businesses money, he added.

For bank-only loans, such as through the SBA’s 7(a) program, lenders can’t get the loan information they need to process capital loans, which could hold up deals, Gallegos said.

Gallegos said clients are worried, as are Cen Cal Business Finance Group’s banking partners because they will have to make extensions for the customers they share.

He noted that interest rates dropped around 25 basis points last month, but borrowers are not able to take advantage of the lower rates because of the shutdown.

Gallegos advises business owners to call their representative in Congress and The White House to encourage a resolution.

“We feel bad for the people that we work with at the SBA and other agencies being in this situation. They got bills to pay and it will affect other businesses that they do business with if this goes on too long, Gallegos said.

Rich Mostert, executive director of the SBA’s Valley Community Small Business Development Center, said the program runs on the calendar year and not the government fiscal year, and is not currently affected by the shutdown.

“We have to act as good stewards on [SBA workers’] behalf, and still do the work within the guidelines of the SBA,” Mostert said. “I feel horrible for all federal employees. They’re not working and I hope there is guarantee of them being made whole again when they come back, but that is a big hit on the family.”

Mostert said that federally backed SBA loan programs like 504 loans are not being approved, but many lenders who do them are still processing loans in the event the impasse clears and the budget gets passed to able to resubmit the loan application.