As forecasted, the federal government shut down at 12:01 AM ET this morning.  While the shutdown will have bigger consequences to the country and economy at large, there are immediate and obvious impacts on the 7(a) Loan Program and the Secondary Market Program.

Here’s a rundown of everything you need to know:

What Congress is Doing

In terms of what will happen next in DC, there will be more votes today in the Senate. Both the House-passed CR that extends funding through November 21 and the Democratic-counter CR that includes additional policy provisions and funding through October 31are slated for votes starting late this morning. Both proposals would require 60 votes to pass which means that there would need to be a significant number of crossover votes for either to pass.

If there is not a successful vote today, the Senate is expected to be in session on Friday and even possibly on Saturday for continued (likely repeated) votes. 

What NAGGL is Doing

NAGGL will be keeping a close watch on these proceedings, anything that may come up from SBA, and any other important updates that the 7(a) industry needs to know so that we can continue to be your source of information.

We know that this impacts not just your institution, but also your small business customers who now are grappling with this latest uncertainty. Please reach out to us if you have any questions.

What SBA is Doing

Here’s a recap of the information that NAGGL has been providing about what happens to the 7(a) program during a shutdown:

CAFS Open for General Servicing Actions Only

The Capital Access Financial System (CAFS) is shut down for new applications but will remain open for general servicing actions.  This means that E-Tran is NOT available to process new loan applications, loan increases or reinstatements of previously canceled loans.

But while lenders will not be able to submit new loans to SBA, they can continue to work with loan applicants and to complete their internal approval processes so that their loans will be ready to transmit to SBA after the shutdown ends.   

SBA Essential Personnel

SBA has identified “essential personnel” who are authorized to take actions necessary to protect the interests of the government during the shutdown, e.g., participating in litigation necessary to protect the government’s interests in collateral.  These individuals are PROHIBITED from performing any work or taking any actions that are not deemed critical to program operations during the shutdown period, so they CANNOT perform their regular duties. 

New Secondary Market Sales Cannot Occur

In accordance with guidance issued by SBA: 

  • The sale of SBA 7(a) loans into the Secondary Market only remained possible for those loans that were entered to SBA’s Capital Access Financial System (CAFS), Settlement Express, and with complete sale documentation received by the FTA to [email protected], no later than 5 PM ET yesterday, Tuesday, September 30. There can be no exceptions to this deadline.
  • Assignees may continue to present SBA Form 1088, Secondary Market Assignment and Disclosure Form, and its related registered certificate for transfer to the FTA for SBA 7(a) Secondary Market Certificate Transfers. This includes Confirmation of Originator Fee transfers. 
  • SBA 7(a) Pooling will be suspended for the duration of the government shutdown. Upon restoration of appropriations and resuming orderly operations, an eligible pool formation calendar will be published on the FTA Wiki.

Watch for updates from NAGGL here—we will be with you through this shutdown.