As we head into another potential government shutdown showdown, small business owners with SBA loans are asking a critical question: What happens to my loan if the government closes?
The short answer? The SBA stops helping you but never stops expecting payment. Welcome to the upside-down world of federal bureaucracy.
The Shutdown Double Standard
During the 2018-2019 government shutdown (the longest in U.S. history at 35 days), the SBA went into "essential functions only" mode. Here's what that meant in practice:
- Loan processing and approvals
- Customer service phone lines
- EIDL reconsideration reviews
- Disaster loan applications
- Any form of human assistance
- Automated payment collection
- Default notices
- Treasury offset program
- Late fees and interest accrual
- Credit reporting
You read that correctly. The systems designed to take money from you keep running. The systems designed to help you go dark.
The Real-World Impact
During the 2018-2019 shutdown, thousands of small businesses were left in limbo:
- Pending loan applications frozen - Businesses waiting on disaster loans after hurricanes couldn't get approved
- No reconsideration processing - Denied applicants had no way to appeal
- Phone lines dead - The already-terrible 2-hour hold times became infinite
- Collections continued - Borrowers in hardship got no relief
"I was trying to get my EIDL reconsideration reviewed. The shutdown hit, and my application sat for 35 days. When they came back, they said I missed a deadline that occurred during the shutdown. You can't make this up."
— Anonymous borrower, Florida
What You Should Do Before a Shutdown
If a shutdown looks imminent, here's your action plan:
- Document everything now. Get confirmation numbers, save emails, screenshot your payment history.
- Make your payment early. Don't risk a payment processing during a shutdown when you can't verify it went through.
- Get any pending requests in writing. If you're waiting on reconsideration or hardship review, get written confirmation of your submission date.
- Don't expect any flexibility. The SBA has historically not extended deadlines for shutdowns, even when they were impossible to meet.
- Contact your congressperson's office. They maintain constituent services during shutdowns and can sometimes intervene on individual cases.
The Bigger Problem
The shutdown vulnerability exposes a fundamental truth about the SBA: it's designed for revenue collection, not borrower assistance. When push comes to shove, the collection machinery is classified as "essential" while customer service is deemed expendable.
This isn't an accident. It's a policy choice.
The same agency that claims it can't process your hardship request due to "staffing limitations" somehow always has enough staff to send collection letters, report defaults to credit agencies, and garnish your tax refunds.
Looking Ahead
With government funding battles becoming annual (and sometimes monthly) events, SBA borrowers need to plan for disruption. The days of expecting consistent service from a federal agency are over.
Our recommendation? Treat every interaction with the SBA as if it might be your last for months. Get everything in writing. Make payments early. Document obsessively.
Because when the lights go out in Washington, the only thing still running is the machine that takes your money.
← BACK TO BLOG