The United States Congress is responsible for passing a bipartisan bill to fund the Federal Government each year. Since an agreement was not reached by the deadline, a government shutdown officially began on October 1, 2025.
During a government shutdown, essential federal employees—such as TSA agents, Air Traffic Control, active duty military, and federal law enforcement—are still required to work, but their pay is delayed until funding is restored and/or the shutdown ends. Employees in roles not classified as essential are temporarily furloughed, halting their work for the period until the government reopens.
For small business owners, this matters because the Small Business Administration (SBA)—a key resource and partner for many entrepreneurs—is not considered an essential agency.
How a Shutdown Affects Your SBA Loan
- New applications will not be processed by the SBA: Once a loan is approved internally by the bank’s credit team, it is submitted to the SBA for final approval and a loan number. Preferred Lenders, such as Grasshopper Bank, work tirelessly in the wake of a shutdown to submit all complete applications before it begins. However, once the shutdown is in effect, the SBA can not issue new approvals or loan numbers, meaning no loans can move to closing until operations resume.
- EIDL Loan Staffing is limited: Since Economic Injury Disaster Loans (EIDL) are tied to disaster recovery, that department is deemed essential and continues to operate, but with reduced staffing. You can still expect activity around EIDL subordinations, change-of-ownership requests, payments, and payoffs though processing times may be slower than usual.
- Payments are still due: Even during a shutdown, existing borrowers are still responsible for making regular loan payments. Most SBA loans are held and serviced by banks and private lenders, so those operations continue without interruption.
- Bank and Private Lender Operations Continue: Banks and private lenders, including Grasshopper, continue to review, underwrite, and approve applications during a shutdown. However, if the SBA approval and loan number weren’t issued before the shutdown began, the loan can’t officially close until the government reopens. Borrowers are encouraged to keep submitting underwriting and closing documentation so that once the SBA is back online, approvals can forward quickly.
What Borrowers Can Expect
During a shutdown, congressional leaders work towards reaching an agreement to fund the federal government. The longest shutdown to date occurred in 2018 and lasted for 35 days. The government can only reopen once a funding bill is passed and funding is restored, and even then, it often takes time for operations to fully return to normal.
For SBA loan borrowers, this means there may be continued delays even after the government returns to work, as SBA employees catch up on the backlog. Partnering with an SBA Preferred Lender like Grasshopper, can help keep your funding timeline on track. Preferred Lenders are authorized to approve many loans without an extensive review by the SBA, minimizing disruption where possible.
How to Stay Prepared as a Borrower
- Stay in touch with your lender. Check in to understand how a shutdown may affect your loan status and any applications in progress.
- Complete documentation early. If you are in the underwriting or closing phase, get all the required documentation to your lender as soon as possible. This ensures your loan can move forward quickly once the SBA reopens.
At Grasshopper, we know that uncertainty around government operations can create stress for business owners, especially when your business plans are tied to SBA funding. The good news is you’re not in it alone. Our SBA Lending team is here to answer questions, help you prepare, and make sure your application is ready to move forward the moment things are back up and running.
