WASHINGTON – Sen. Mark R. Warner (D-VA) wrote to the Small Business Administration (SBA) today to express concern and solicit information on the backlog of loans created by the partial government shutdown. The 35-day lapse in appropriations jammed the approval process of SBA loans—a particularly alarming fact for Virginia, where 1.5 million individuals, nearly half of the Commonwealth’s employees, are employed by small businesses.

“I fear the fallout from the Administration’s 35-day shutdown will slow Virginia’s economic growth and innovation,” wrote Sen. Warner. “According to some estimates, the shutdown delayed about $2 billion in SBA lending and more than 300 small business loans per day. A backlog of loan applications could have a chilling effect on small businesses’ confidence, investment, and hiring.” 

According to SBA’s shutdown contingency plan, more than 2,000 SBA positions were subject to furlough, freezing essential loan programs that allow individuals to start or expand businesses, make essential repairs and refinance debt. SBA loans are vital contributors to innovation and growth and have been used by the founders of companies like Under Armour, Chipotle and Apple to kick-start their businesses.

“News reports shared the stories of small business owners who had to cancel SBA-financed expansion plans because of the shutdown, as well as entrepreneurs who were unable to access SBA loans to open their businesses,” Sen. Warner continued.“Throughout the 35-day period, Americans hoping to obtain an SBA loan to start or expand their small business had to put their ambitions on hold — or turn to more costly capital alternatives— while they waited for the government to get its act together. I am deeply concerned with backlog left for SBA employees now that the shutdown is over, and other impacts the lapse in funding had on SBA’s vital functions.”

In his letter to SBA Administrator Linda McMahon, Sen. Warner asked for information in order to evaluate the shutdown’s lasting damage on small businesses. Specifically, he requested a list of all functions that were reduced or postponed. He also asked about the number of loan applications in the backlog and about SBA’s plan to address this backlog.

A PDF copy of the letter is available here and the text appears below.

 

January 31, 2019

 

Linda McMahon

Administrator

Small Business Administration

403 3^rd Street, SW

Washington, DC 20024

 

Dear Administrator McMahon:

 

I write to raise concerns with a potential backlog of Small Business Administration (SBA) loans created by the government shutdown. Virginia has over 680,000 small businesses, which collectively employ approximately 1.5 million Virginians, almost half of the Commonwealth’s employees.[1] The Commonwealth’s economy, like our nation’s economy, depends on our small businesses and entrepreneurs. I fear the fallout from the Administration’s 35-day shutdown will slow Virginia’s economic growth and innovation.

 

Support from the SBA has been a key contributor to our nation’s innovation leadership, providing early funding and resources to renowned companies such as Apple, HP, Intel, FedEx, and AOL in the early years.[2] Under Armour was started by founder Kevin Plank with the help of a small SBA loan at just 23 years old. Chipotle used a SBA loan to open a third store setting the food chain on a path to open more than 2,450 restaurants and to employ over 70,000 people.

 

According to SBA’s Lapse Appropriations Contingency Plan, over 2,000 positions at the agency were subject to furlough. Moreover, reports indicated that, during the shutdown, the SBA stopped approving routine small business loans upon which entrepreneurs and established firms depend. According to some estimates, the shutdown delayed about $2 billion in SBA lending and more than 300 small business loans per day. A backlog of loan applications could have a chilling effect on small businesses’ confidence, investment, and hiring. 

 

For over a month, the reduced flow of capital put many small businesses in a precarious position. News reports shared the stories of small business owners who had to cancel SBA-financed expansion plans because of the shutdown, as well as entrepreneurs who were unable to access SBA loans to open their businesses. Throughout the 35-day period, Americans hoping to obtain an SBA loan to start or expand their small business had to put their ambitions on hold — or turn to more costly capital alternatives— while they waited for the government to get its act together.

 

I am deeply concerned with backlog left for SBA employees now that this shutdown is over, and other impacts the lapse in funding had on SBA’s vital functions. To assess the lasting damage that the shutdown has caused, please provide me with the following information:

 

1.      A list of all SBA functions that were stopped or reduced during the lapse in funding.

 

2.      The number of loan applications that are in the backlog. 

 

3.      How will SBA address the loan backlog that was created by this shutdown?

 

I appreciate the vital functions SBA provides to small businesses and entrepreneurs in Virginia and across the country. I hope the SBA can quickly dig out of the hole in which the Administration placed both your agency and our nation’s small businesses.  

 

Thank you for your attention to this matter.

 

 

 

Sincerely,

 

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