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omb -- Lapse in federal government funding.

Posted: 08 Apr 2011 14:03:32
Should Congress be unable to pass a funding bill, the SBA will
stop approving all new business loans in the 7(a) and 504 loan
programs at 11:59 PM on Friday, April 8. Dear SBA partners,

It is still possible that the Administration and Congress will
reach a compromise that will avoid a lapse in federal government
funding. However, prudent management requires that we plan for an
orderly shutdown should Congress be unable to pass a funding bill
by the end of the day on Friday, April 8th. Please read this
message carefully, as it contains several critical pieces of
information.

Should Congress be unable to pass a funding bill, the SBA will
stop approving all new business loans in the 7(a) and 504 loan
programs at 11:59 PM on Friday, April 8. This includes loans
submitted under delegated authority. Lenders may continue to
submit loans to the SBA, but none will be approved until a
funding bill is signed by the President. 

In the event of a lapse in appropriations, most SBA servicing and
liquidation processing centers will also shut down. (However,
liquidation activities related to the 504 loan program and to
7(a) loans that SBA has already purchased will not be shut down.)
Previously scheduled lender oversight reviews, including Dealer
Floor Plan reviews, will be postponed and re-scheduled as soon as
a funding bill is passed.

Certain tools and services that do not require continued
appropriations will, however, continue to operate as planned.
These include:
•	The agency’s electronic E-Tran tool, which will remain
operational. Lenders may submit loans for approval with the
understanding that SBA will not fund any loans until a funding
bill is signed by the President. Lenders may also submit
unilateral servicing actions that do not require new funds; any
servicing actions that require SBA approval, however, will not be
completed.
•	The agency’s fiscal transfer agent, Colson Services, which will
continue to operate. Any functions normally handled by Colson
Services will continue, including sales on the secondary market
and the submission of Form 1502. Any actions, however, that
require SBA approval—such as sales on the secondary market in
which there are discrepancies between a lender’s data and
Colson’s—will not be completed.

In addition, the agency’s microloan program will shut down; SBA
microlenders may, however, continue to issue loans to small
businesses using previously disbursed funds. Finally, the
agency’s surety bond program will shut down for all surety
companies in the Prior Approval program (though not those in the
Preferred program).

As the budget situation continues to evolve, please know that
Administrator Mills and I are committed to providing you with the
latest information about a possible shutdown and the impact it
would have on you. Thanks so much for your hard work and please
stay tuned for more information.

Steve Smits
Associate Administrator
Office of Capital Access

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