NAGGL’s President and CEO, Tony Wilkinson, today issued the following statement: 

“The 7(a) industry needs to be aware that the risk for a government shutdown has significantly increased over the past 24 hours and lenders should be at least prepared for a government shutdown of some length. Congressional leaders are currently working to negotiate a deal to fund the government beyond the Friday, December 20 deadline, which gives lawmakers until midnight on Saturday morning to prevent a shutdown. Given how fluid these negotiations are, it is currently unknown when a deal could come together or, if there is a shutdown, how long it could last. Since the 7(a) Loan Program and the Secondary Market Guarantee Program both rely upon the federal government remaining operational, NAGGL, as always, will remain on top of the latest coming out of Capitol Hill, and make sure that we are keeping you all apprised of how any funding deal or possible shutdown will impact your important work.”

Key Facts to Keep in Mind Relating to 7(a) Lending In the Event of a Shutdown:

  • In the event of any shutdown, there are no new 7(a) loan approvals (including loan increases) and no new sales on the secondary market.
  • Ahead of previous shutdown threats during this Administration, SBA has said in the past regarding the secondary market that:
  • The sale of SBA 7(a) loans into the Secondary Market may continue only for those loans where all required sale documentation was received by the FTA via [email protected] on or before a specific deadline announced by SBA.  
  • 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 resumption of orderly operations, an eligible pool formation calendar will be published on the FTA Wiki.

When it comes to how SBA will approach this particular possible shutdown, SBA will communicate with lenders directly as to the details of any shutdown plan and NAGGL will be sure to forward along to lenders any instructions coming out of SBA.

Background: This turnaround in government funding negotiations abruptly occurred late yesterday afternoon when President-elect Trump issued a statement opposing the bipartisan deal negotiated by Speaker Johnson that would have extended funding under another Continuing Resolution (CR) to March 14, 2025.  Trump has specifically called out that the Johnson CR, which contains 1,500 pages of policy and miscellaneous funding, including $100 billion in disaster aid, needs to be a “clean CR,” which means a stripping away of additional spending (though Trump has indicated he is okay with disaster funding being including). Trump is also insisting that any deal must include a deal to lift or suspend the debt ceiling, which is slated to be hit sometime in the beginning half of 2025 (some estimates indicate June, others project it could be reached sooner). Trump’s position have meant that Johnson’s deal now needs to be renegotiated. However, it appears highly unlikely that by midnight tomorrow a clean CR with a debt ceiling lift will be negotiated and passed.