SBA Lending Halted as Government Shutdown Continues

Connect with the authors: margarita.vacanti@curinos.com; jacob.nygren@curinos.com

Because of the ongoing federal government shutdown, the Small Business Administration (SBA) has largely ceased operations, severely disrupting several core lending programs. Since the shutdown began, the SBA estimates that it has frozen approximately $170M in loans per day, and over $4B in total.

Data from Curinos’ LendersBenchmark Analyzer substantiates the impact. Bank-reported booked SBA volumes have fallen sharply, by nearly 70% since October 1 (Figure 1). With the SBA’s application system currently closed to new submissions and reviews, only those loans already in the pipeline and approved with an SBA loan number prior to October 1 are eligible for booking.

Figure 1: Monthly Small Business Bookings Volume, Indexed to January 2025

Source: Curinos LendersBenchmark Analyzer

Typically, a portion of small business applications for non-SBA products have been booked as SBA loans. This is often because newly formed businesses can’t meet their bank’s longevity or underwriting requirements and/or the borrower’s credit score is too low. But SBA rule changes in March triggered a trend away from the practice, and since the shutdown began, conversions to SBA have effectively flat-lined (Figure 2).

Figure 2: % of Non-SBA Applications that Booked as SBA

Source: Curinos LendersBenchmark Analyzer

While a bipartisan deal to end the shutdown would reopen SBA operations, the timing of such a deal remains uncertain. Facing prolonged uncertainty around the SBA program and significant expected backlogs, we may begin to see a shift toward non-SBA products for those who qualify. For those who don’t qualify, a further prolonging of the shutdown may result in reduced capital for newer businesses and a meaningful retraction of operations.