Government Shutdown Impacts Top SBA Lenders
The ongoing government shutdown is causing havoc in various sectors, with the nation’s leading Small Business Administration (SBA) lenders bearing the brunt. As the uncertainty surrounding the shutdown continues, companies like NewtekOne and Live Oak Bancshares have expressed concerns about the potential impacts on their operations, especially if the shutdown drags on.
Unpredictable Future for NewtekOne
NewtekOne, a top SBA lender, recently reported strong third-quarter earnings. However, CEO Barry Sloane expressed concerns about the potential impacts of the prolonged government shutdown on their fourth-quarter results. The company declined to publish its fourth-quarter projections, citing the government shutdown’s uncertainty. “We can’t live by the previous guidance given the basis of the government shutdown,” Sloane said on a conference call with analysts.
Resilience Amid Challenges
Despite the challenges, both NewtekOne and Live Oak Bancshares have asserted their ability to quickly resume normal operations once the shutdown is resolved. However, they’ve also warned that an extended impasse could complicate matters, disrupting the timing of secondary-market transactions and creating the need for bridge loans to capital-strapped borrowers.
Implications of the Government Shutdown
The government shutdown began on October 1, 2025, following lawmakers’ failure to agree on a plan to fund health insurance subsidies authorized under the Affordable Care Act. The shutdown has had far-reaching consequences, leading to missed paychecks for key federal employees and threatening essential programs such as the Supplemental Nutrition Assistance Program. This has prompted business advocacy groups, including the American Bankers Association and the Financial Services Forum, to urge for an end to the shutdown, citing potential economic disruption.
SBA Lending in the Wake of the Shutdown
Live Oak Bancshares and NewtekOne have said that a continuing shutdown may necessitate extending bridge loans to some hard-pressed clients. Fiscal 2025 was one of the busiest years for the SBA, with loan originations under its two biggest programs, 7(a) and 504, exceeding $45 billion. However, since the start of fiscal 2026 on October 1, these programs have remained shuttered.
NewtekOne’s Stellar Performance
NewtekOne’s fiscal 2025 ended on a high note, with the company considered “effervescent” by its CEO. The company ranked as the second-most active lender in the flagship 7(a) program, with loan approvals totaling over $2.03 billion. This robust performance drove the third-quarter net income to an impressive $17.9 million, a 50% increase from the same period in 2024.
Shutdown Resolution Remains Elusive
A solution to end the shutdown has proved elusive, with Democrats and Republicans blaming each other for the impasse. The impact on small businesses has been significant, with the House Small Business Committee Chairman Roger Williams stating, “By voting against this clean funding extension, Democrats have left Main Street without certainty.”
In conclusion, the government shutdown poses significant challenges for SBA lenders. The situation remains uncertain, with businesses like NewtekOne and Live Oak Bancshares hoping for a swift resolution to minimize the impact on their operations and the broader economy. Find out more about this issue Here.
