Happy New Year! — The Silence of the Loans
October 1, 2025
Bob Coleman
Founder & Publisher
Happy New Year! — The Silence of the Loans
It is 12:01 a.m., the first minute of the government’s FY26, and Congress has failed to pass a funding bill. The SBA is now in “lapse mode.” Like The Silence of the Lambs, what’s chilling here is the silence — no new 7(a) approvals, no 504 closings, no routine lender reviews.
Many of our friends inside the SBA are now furloughed, and despite our tongue-in-cheek headline, this is a serious situation. It directly affects the SBA, lenders, and Main Street small businesses that rely on access to capital.
Based on the SBA’s September 2025 Lapse Plan, here’s how your lending operations are affected right now.
- New 7(a) Loan Approvals Stop
No new 7(a) approvals or program support will be processed during a lapse. Lenders won’t be able to submit or finalize new guarantees until funding is restored.
- New CDC 504 Approvals Halt
The 504 program will stop approving new loans. Certified Development Companies (CDCs) can expect delays until the government reopens.
- Secondary Market Support Suspended
The SBA’s Secondary Market Loan Program will not receive support. This disrupts liquidity for lenders who rely on selling guaranteed portions.
Note SBA 504 debenture sales will continue as scheduled.
- Microloan Program Lending Paused
New loans to Microloan Intermediaries stop, cutting off fresh capital to nonprofits that extend microloans to borrowers.
- 7(a) and 504 Loan Servicing and Liquidation Continue
While no new approvals are issued, SBA will continue servicing and liquidating existing 7(a) and 504 loans. This protects lender recovery rights in default situations.
SBA wrote yesterday, “CAFS will remain open for general servicing actions; however, there will be no loan increase or reinstatement capability until SBA offices reopen.”
- 7(a) Loan Liquidation Continues
For government-owned 7(a) loans, SBA staff will continue liquidation and collection. Lenders can still rely on SBA to protect these assets.
- Credit Risk Management Limited to Imminent Loss
The SBA’s Office of Credit Risk Management (OCRM) will only handle imminent loss situations. Routine lender reviews and exams are suspended until funding is restored.
- OCA Lender Reviews Paused
This is critical: regular OCA lender reviews are on hold. Oversight exams, portfolio reviews, and standard monitoring won’t happen during a shutdown. Only urgent risk-related actions continue.
- Surety Bond Program Limited
Only Preferred Surety Bond (PSB) providers may continue issuing SBA-guaranteed bonds under delegated authority. All other approvals are suspended.
- COVID-19 EIDL Servicing Continues
SBA will keep managing and servicing COVID-19 Economic Injury Disaster Loans, important for lenders with borrowers still carrying this debt.
In short: For lenders, the shutdown freezes new approvals and oversight, but keeps servicing, liquidation, and risk management for imminent loss running. Expect disruption in deal flow, delayed reviews, and a narrower channel of SBA support until appropriations return.