Member Message from Tony Wilkinson, NAGGL President & CEO

To state the obvious, Fiscal Year 2025 (FY25) ends in about a week, and following what has become an annual pattern, there is still no clear path forward on the funding package for FY26 before the clock strikes midnight on September 30. 

Last week, the House passed a Continuing Resolution (CR), a short-term extension of the previous FY’s funding to give Congress more time to reach a funding deal.  That CR would have kept the government open through November 21.  But when the CR was subsequently voted on in the Senate, it did not pass, and as of now, there is no indication as to whether a deal can be reached.

There has been and will continue to be much speculation in the national media coverage about whether we could see a government shutdown on October 1, given the current state of play in DC.  And most recently, President Trump has also weighed in on the shutdown prospects. 

The reality is that while we have seen this movie play out every year, it is almost impossible to forecast what could happen.  But given that a government shutdown impacts the SBA’s ability to approve both new 7(a) loans and new sales in the Secondary Market Guarantee Program, we thought that it was important for us to make sure our membership knows that the possibility of a shutdown remains on the table.

As of the publication of this message, the 7(a) Loan Program has totaled just over $35 billion in gross lending.  While we only have an authorization cap this FY of $35 billion, do not be alarmed— availability relies upon net volume, and it is our understanding that, given cancellations that have been made throughout the FY, the remaining net authorization will more than likely be sufficient through September 30.  Lenders can help to assure that the maximum program authority remains available by canceling any loans that were approved since October 1, 2024 and will not be disbursed.

The good news is that if a shutdown occurs, lenders will still be able to continue their internal approval processes, and when a deal to reopen the government is reached, the process by which SBA is able to reopen loan approvals should be quick.  

NAGGL is actively communicating with Congress, in particular, the appropriators on Capitol Hill, in order to help ensure that the 7(a) industry is set up for success. 

In the event of a Continuing Resolution (CR) passing now or in the future, it appears that the 7(a) Loan Program will have what is called an “apportionment anomaly”.  This anomaly language gives special permission for the program to use the full FY’s anticipated authorization, rather than only having access to prorated authorization amounts made available during the CR.  NAGGL has fought for years to ensure that any CR includes this special recognition of the 7(a) Program to protect its stability and availability during an impending CR.  

And in preparation for when a full-year FY26 funding deal is reached, NAGGL has also been in conversation with Capitol Hill to ensure that the 7(a) Loan Program and the Secondary Market Guarantee Program are well situated with sufficient authorization caps.  We will keep you posted on those details as a CR and then a FY26 funding deal comes into focus.

Again, at this point, what will happen beginning October 1 is anybody’s guess.  We have faced down-to-the-wire situations like this in the past when it seemed as if no funding deal could materialize, only to see a deal reached within minutes of the funding deadline.  We’ve also collectively been through government shutdowns in the past—some that lasted a few hours and some that lasted over a month. 

But given the growing intensity of the national conversation around the funding deadline and the limited time left until September 30, we wanted you to be aware of what’s going on so that you can plan accordingly and obtain approvals for your complete applications.

Below are some key facts regarding a shutdown and how it impacts 7(a) lending and the secondary market. And, as always, continue to watch your inbox for communications from NAGGL.

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Key Facts Relating to 7(a) Lending in the Event of a Government Shutdown:

  1. If there is a shutdown, SBA cannot approve any new 7(a) loans or increases to previously approved 7(a) loans, and new secondary market sales cannot occur. 
  2. While guidance related to secondary market sales may change, in advance of threatened shutdowns, SBA has previously provided guidance stating that:
  • The sale of SBA 7(a) loans into the Secondary Market could continue only for those loans where all required sale documentation was received by the SBA fiscal and transfer agent (FTA) on or before a specific deadline as announced by SBA.  
  • Assignees could 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, including Confirmation of Originator Fee transfers.
  • SBA 7(a) Pooling would be suspended for the duration of the government shutdown. Upon restoration of appropriations and resumption of orderly operations, an eligible pool formation calendar would be published on the FTA Wiki.