As of October 1, 2025, a federal government shutdown is in effect, bringing a wave of uncertainty across the financial industry. For institutions involved in SBA lending, the impact is immediate and significant. Key systems go offline, loan processing halts, and both lenders and small business owners are left wondering what comes next.
However, a shutdown does not have to mean a complete standstill for your lending operations. While the SBA’s core functions are paused, this period offers a strategic opportunity for proactive lenders to prepare, communicate effectively, and position themselves to lead the market once the government reopens.
This guide will break down exactly what happens during an SBA shutdown and provide an actionable playbook for your institution.
What the Shutdown Means for SBA Lending
The most critical consequence of a government shutdown is that the Small Business Administration (SBA) cannot issue new loan authorizations due to a lapse in appropriations.
What Shuts Down? Key SBA Systems and Programs
For lenders, the most significant operational impact is the shutdown of the SBA’s Capital Access Financial System (CAFS) for new applications.
- E-TRAN is Unavailable: Lenders cannot access E-TRAN to submit new 7(a) and 504 loan applications. This means no new SBA loan numbers can be issued until the system is brought back online.
- Core Loan Programs Halted: This suspension applies to all NEW 7(a) products, including SBA Express loans, even for lenders with delegated authority.
- Existing Approved Loans: If you have already received an SBA loan number, you may proceed with closing and funding that loan as it stands.
- Servicing Actions Limited: While general loan servicing can continue, any action that requires direct SBA approval, such as a loan increase or reinstatement, will be delayed.
Secondary Market and IRS Impacts
Beyond the SBA’s direct systems, lenders should be aware of two other key impacts:
- Secondary Market Sales: The SBA has ceased processing new settlement packages. Only packages submitted before the 5:00 PM ET deadline on September 30th will be processed.
- IRS Operations: The IRS is currently operating under a contingency plan funded by the Inflation Reduction Act, which is expected to last until October 7, 2025. While services like transcript processing are available for now, it is unclear how they will be affected if the shutdown continues beyond that date.
What Stays Open? Important Exceptions
Not all SBA programs are affected. A few key loan types are funded through separate appropriations and continue to operate normally:
- SBA Disaster Loans: This critical program remains active to assist businesses and individuals in officially declared disaster areas.
- SBA Microloans: Because the SBA funds intermediary lenders in advance, the Microloan program continues without interruption.
A Strategic Playbook for Lenders: Your Action Plan
While others are waiting, your institution can get ahead. Here’s how to turn this downtime into a competitive advantage.
Build Your “Ready Queue”
The single most valuable activity you can undertake right now is to build a queue of “SBA-ready” applications. Instead of pausing your intake, continue to work with new applicants to package and pre-underwrite their loan files. Complete your internal credit analysis, gather all necessary documentation, and prepare the entire application for submission. When the shutdown ends, you’ll be at the front of the line.
Communicate with Confidence
Proactive communication is essential. For applicants in your pipeline, reassure them that you are continuing to prepare their file for immediate submission post-shutdown. For new loan inquiries, frame this period as an opportunity to build a strong, complete application so they will be perfectly positioned when the SBA reopens.
Partnering Through Uncertainty
Navigating the complexities of an SBA shutdown requires expertise and resources. A shutdown doesn’t mean you’re on your own.
The Windsor Advantage team remains fully operational, providing the support our partners need to continue building their pipelines. We can help package and prepare your loan files while our Accel platform keeps your pipeline organized. Furthermore, Windsor will continue to support any modifications within your unilateral authority and prepare any matters requiring SBA approval for submission once the government resumes operations.
A government shutdown is a challenge, but it is a temporary one. By taking these strategic steps, your institution can emerge from it with a stronger pipeline and more resilient client relationships.
Interested in learning how Windsor Advantage can help you prepare your SBA pipeline? Contact us today.