When the Small Business Administration closed during the government shutdown, many small businesses saw their loans put on hold. But even those who were approved before the deadline, Washington Journal reported, are experiencing setbacks.
For some, the intermingled bureaucracy is bringing their loan to a dead end. Charlotte Calmels, a restaurant owner, was hoping to receive her SBA approved loan before a grand opening this month. However, before she can seal the deal, Calmels must confirm her legal immigration status. Though open, the federal immigration agency stopped receiving requests from the SBA.
“I have the keys to the restaurant,” said Calmels. But with the loan not going through, she may not be able to open or hire any employees.
Lynn Ozer, who works for the company that submitted Calmel’s loan, warns businesses that, even when the SBA gets back running, there could be delays of six weeks or longer to process loans. The backlog of approvals could drastically swamp the furloughed agency workers.
Many small businesses cannot afford that long of a wait.
“This is a new business,” said Ishwar Chauhan of his specialty pharmaceutical company. “Every day is important to us.” Chauhan secured an SBA loan, but has to wait for the agency to return so they can approve a modification to the agreement.
Loans on the decline
Some businesses may be considering loans from traditional banks to bypass federal delays. This route, however, may not be as effective as some believe. Bank lending was on the decrease before the shutdown even began. New survey data from Biz2Credit revealed that both big and small bank approval percentages dropped slightly during the month of September.
Prior to concern over the shutdown, banks expected to see an increase in approvals for the month, Bloomberg Businessweek reported. During the first half of September, banks were more plentiful with approvals. That number decreased, however, as threat of a shutdown grew.
If budget uncertainty is enough to impact the rate of lending, small businesses that plan on getting a small business loan from a bank in the coming months may be out of luck. Current Senate agreements plan only to stall budget agreements rather than settle them. This means anxiety could remain aloof in the banking industry for months after the shutdown.
In the meantime, small businesses should be aware of alternative financiers that can be of help. National Funding offers a variety of financing services that have been uninterrupted by the SBA closure. Businesses that can’t afford the wait on federal loans, or anticipate rejection from stiffening banks should learn more about National Funding’s lending options.