Industry group urges reopening of SBA, citing impact of shutdown

Calling them “essential to the success of so many small businesses,” Consumer Bankers Association President and CEO Richard Hunt urged President Trump and congressional leaders Tuesday to “explore all options” to reopen the Small Business Administration’s 7(a) and 504 loan programs.

In a letter addressed to Trump, House Speaker Nancy Pelosi and Senate Majority Leader Mitch McConnell, Hunt wrote that the shutdown is affecting as many as 300 loans per day. Cut off from SBA funding, small businesses are either delaying important initiatives or turning to higher-cost alternative funding.

“There have been reports of small businesses having to absorb large deposit payments on purchases which were dependent on SBA loans and incurring high costs from non-traditional lenders in order to meet payroll,” Hunt wrote.

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Much of the government, including the SBA, has been shuttered since Dec. 22.

Hunt’s counterpart at the American Bankers Association, Rob Nichols, released a letter earlier this month urging Congress and the administration to settle their differences and bring a comprehensive end to the shutdown. Hunt asked only that “all options be explored to reopen” the SBA.

There is some precedent to the type of workaround Hunt is advocating. Last week, the Department of Agriculture agreed to reopen for three days to process farm loans. The Treasury Department also took steps to allow IRS income verification for mortgages, an activity that was initially stopped as a result of the shutdown.

Hunt also called on officials to ensure that small businesses that have obtained temporary bridge funding aren’t deemed ineligible for future SBA funding as a result of the agency’s credit-elsewhere test, which bars companies able to obtain conventional loans from receiving SBA guarantees.

Chris Hurn, founder and CEO of Fountainhead Commercial Capital in Lake Mary, Fla., said he viewed Hunt’s letter as a positive step.

“It’s a shame all these different transactions have been placed in jeopardy,” Hurn said Tuesday. “Thousands of small businesses are being affected. It doesn’t seem right.”