As consequences of the almost three-week partial government shutdown continue to come to light, the lack of loan approvals from the Small Business Administration (SBA) is creating problems for consumers and lenders that use the agency’s programs, including credit unions.
Miguel Maldonado, senior vice president at NAFCU-member Randolph-Brooks Federal Credit Union (Live Oak, Texas), told American Banker’s John Reosti that “depending on how long the shutdown is in effect, we could see some negative impact to the program and the economy.”
According to the American Banker article, the shutdown is creating a severe backlog of applications as the SBA is unable to process and approve them. Maldonado said that this delay “can affect small businesses and their ability to operate, or even get off the ground.”
During the government shutdown, those seeking loans through the SBA’s programs might instead turn to high-cost alternative lenders, Reosti wrote. Disaster assistance is also available. Once the government is reopened, it is likely that it will take the agency two to three weeks to process requests from its normal one-week turnaround, another industry representative said.
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