The Shutdown Begins: Navigating Impacts on SBA Loans for Advisors
The Shutdown Begins: Navigating Impacts on SBA Loans for Advisors
At midnight EDT today, the United States federal government officially entered a shutdown after Congress failed to approve a stopgap funding bill, initiating the first full closure since the 2018-2019 period. While critical services like national security and Social Security benefits persist, non-essential functions – including major loan processing at the Small Business Administration (SBA) and U.S. Department of Agriculture (USDA) – are now halted or heavily disrupted.
For independent financial advisors, RIA owners, or those pursuing practice transitions, this isn't abstract policy drama; it's a potential roadblock to securing SBA-backed financing for acquisitions, expansions, or successions, directly affecting your firm's trajectory and client commitments.
Why the Shutdown, and How Long Might It Last?
Federal funding lapsed at the end of September 30, 2025, amid unresolved partisan disputes over appropriations. The fallout includes furloughs for over 800,000 federal employees, shuttered national parks, and paused grant reviews agency-wide.
Shutdown durations have ranged from days (e.g., the three-day 2013 episode) to over a month (the 35-day 2018-2019 standoff). This 2025 iteration's length remains uncertain, but every passing day amplifies risks for advisors and lenders alike.
SBA Loan Disruptions: A Chill on Financing
Here's the breakdown for advisor-focused deals:
No Fresh Guarantees or Approvals: Applications for core programs like 7(a) loans (up to $5 million for partner buyouts or working capital) and 504 loans (for real estate like office condos) are frozen. SBA's central processing units are dormant, preventing new guarantees until funding returns.
Narrow Path for In-Progress Loans: Deals with pre-shutdown conditional approvals may still proceed to closing in the short term. That said, as these limited guarantees deplete swiftly, even ongoing transactions could grind to a halt.
Advisors in mid-application for practice valuations or equity injections should brace for delays in direct SBA communications. At AdvisorLoans we’ve been through this before and made sure all eligible in-process SBA loans we have received pre-shutdown conditional guaranties for funding during the shutdown.
Immediate Steps for Advisors and Lenders: Stay Proactive
Don't let the standstill sideline your plans. Here's how to safeguard your position:
Validate Pre-Approval Status: Immediately consult your lender to verify if your SBA or USDA financing for a succession or buyout locked in a guarantee before October 1. If affirmed, prioritize closing to outpace the impending rush.
Accelerate Document Preparation: It is highly likely that the SBA will re-open within the normal course of an SBA loan which is typically 6-8 weeks. We advise to not stop or slow down as most SBA loans in the early process won’t run into extended delays for funding in our view. Lenders can manage the loan underwriting and approval to about the point of funding. Everyone but the SBA is still working.
Looking Beyond the Shutdown: Resilience Pays Off
Like market corrections Government halts are jarring yet fleeting. Recoveries tend to accelerate, with lenders streamlining backlogs to capture deferred opportunities.
AdvisorLoans is here to sustain momentum: We're conducting consultations and structuring deals proactively, ready to expedite funding the instant operations normalize.
AdvisorLoans: Tailored Financing for Advisors
At AdvisorLoans, we prioritize impartial, transparent advice tailored to your goals. Our process is straightforward and designed with your best interests in mind. Whether it's evaluating the viability of your loan request, identifying potential roadblocks, or crafting solutions for equity injection or collateral, we’ve got your back. We’ll help you weigh SBA versus conventional financing, highlight workarounds when challenges arise, and ensure the financial strategy aligns with your bigger picture. Experienced, resourceful, and candid, we’re here to help you make the right move for your practice.