Government Shutdown Halts SBA 7(a) Lending & Secondary Market Activity
As of October 1, 2025, the federal government has officially shut down after Congress failed to reach a budget agreement for the 2026 fiscal year. Without an agreement in place, many federal agencies, including the Small Business Administration (SBA), have suspended operations.
Why the Shutdown Happened
Lawmakers were unable to agree on federal spending priorities. With the fiscal year funding expiring on September 30th, the shutdown took effect at 12:01 AM on October 1. In government shutdowns, essential services will continue, but “non-essential” functions are paused, with thousands of federal employees left furloughed in the meantime.
Impact on SBA 7(a) Lending
For small business lenders, the impact of the government shutdown is both immediate and significant:
- The SBA cannot issue new 7(a) loan numbers or approve increases to pending loans
- Loans already assigned a number may still be funded
- Servicing actions that do not require SBA approval may proceed but anything that requires SBA sign-off is on hold
- Applications for future processing will not be held
Second Market & Pooling Suspended
According to guidance from NAGGL (National Association of Government Guaranteed Lenders):
- No secondary market loan sales will be processed during the shutdown
- No new SBA pooling can occur
- Documentation submitted before the shutdown may be honored once operations resume, but there will likely be a backlog, and delays are to be expected
What This Means for Lenders
The government shutdown will create challenges for loan pipeline management as lenders holding guaranteed portions that they planned to sell will face potential short-term balance sheet strain. Additionally, borrowers who are awaiting approval now have to wait for government operations to resume.
Bottom line
Until Congress passes an updated funding bill, SBA 7(a) activity is effectively on pause. There will be no new approvals, no pooling, and no secondary market loan sales.