You undoubtedly have heard that yesterday, January 27, 2025, the Trump Administration’s Office of Management and Budget (OMB) issued a memorandum to all Executive Departments and Agencies that orders all federal agencies to “temporarily pause all activities related to obligation or disbursement of all Federal financial assistance.”
Based on the most recent reports, as of the publication of this message, it appears that OMB has clarified that some programs will be exempted from this pause, including “funds for small businesses.” NAGGL is waiting for formal clarification from SBA and the Administration which we believe will come soon, particularly definitive guidance as to treatment of the 7(a) Loan Program and the Secondary Market Guarantee Program.
As you can imagine, NAGGL has been in constant discussions with the Hill, the Administration, and other relevant parties as we have worked to get a final answer as to the applicability of this memo to the 7(a) Loan Program. We are committed to keeping our members in the 7(a) industry informed and will notify you when we obtain any new information.
Watch your inbox for complete information from SBA and NAGGL as soon as it becomes available.
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Background on OMB Memorandum on Federal Financial Assistance Pause:
In addition to a pause on Federal financial assistance, the memorandum also calls for a pause on “other relevant agency activities that may be implicated by the executive orders [recently issued by President Trump], including, but not limited to, financial assistance for foreign aid, nongovernmental organizations, DEI, woke gender ideology, and the green new deal.” This pause is described by the memo as a way to give the Administration time to “review agency programs and determine the best uses of the funding for those programs consistent with the law and the President’s priorities.”
It is critically important to note that federal regulations include “loans” and “loan guarantees” in the definition of “Federal financial assistance.” [2 CFR 200.1 defines Federal financial assistance and OMB notes that for the purposes of the memo, all forms of assistance in paragraphs (1) and (2) of the definition of Federal financial assistance in 2 CFR 200.1 are included.] This does not take into account any OMB exemptions or clarifications.
The pause of programs which are covered under the OMB memo starts at 5 PM ET today, January 28, 2025. Per the memo, agencies have until February 10, 2025 to submit to OMB a list of all programs that are subject to this pause; however, there is no indication when any pause of a specific program would be lifted or whether OMB would then have a separate process to determine which programs would resume.
