Gov't shutdown stops SBA loan approvals
As consequences of the almost three-week partial government shutdown continue to come to light, the lack of loan approvals from the Small Business Administration (SBA) is creating problems for consumers and lenders that use the agency's programs, including credit unions.
Miguel Maldonado, senior vice president at NAFCU-member Randolph-Brooks Federal Credit Union (Live Oak, Texas), told American Banker's John Reosti that "depending on how long the shutdown is in effect, we could see some negative impact to the program and the economy."
According to the American Banker article, the shutdown is creating a severe backlog of applications as the SBA is unable to process and approve them. Maldonado said that this delay "can affect small businesses and their ability to operate, or even get off the ground."
During the government shutdown, those seeking loans through the SBA's programs might instead turn to high-cost alternative lenders, Reosti wrote. Disaster assistance is also available. Once the government is reopened, it is likely that it will take the agency two to three weeks to process requests from its normal one-week turnaround, another industry representative said.
Many credit unions use SBA programs, including the 7(a) loan program, to provide loans to small businesses and entrepreneurs in their communities. NAFCU witness Sonya McDonald, executive vice president and chief lending officer at Randolph-Brooks, testified before the Senate Small Business Committee last year and highlighted the value credit unions provide the nation's small businesses.
Another potential issue for the SBA during the government shutdown is reviewing comment letters on some proposed rulemakings. NAFCU last month submitted recommendations for the agency's express loan proposal.
Despite the government shutdown, NAFCU remains diligent in carrying out the responsibilities outlined in the Memorandum of Understanding with the SBA; the association met with the agency in October to discuss ongoing efforts.
NAFCU will continue to keep credit unions updated on the impacts of the government shutdown and funding discussions between Congress and the president. Credit unions' efforts to support members affected by the shutdown have gained national attention.
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