Statement of Subcommittee Chairwoman Judy Chu on Shutdown Lessons: SBA Capital Access Programs
Washington, February 26, 2019
We thank everyone for joining us this morning and I want to especially thank the witness for being here today.
The recent government shutdown was an acutely painful experience for our nation’s small businesses. It was 35 days of missed paychecks, delayed loans, and strained budgets for too many of our federal employees, contractors, and small business owners.
Perhaps most concerning to small firms, was the sheer uncertainty of how long the shutdown would last. Though the government is now back open, the damage to our economy is lasting. During the shutdown, we saw many entrepreneurs and small business employees take extraordinary measures to make ends meet, and they’re still fighting to get back on their own two feet.
It is clear that no business or family should be put in this position. Not only were business owners feeling the pain, several federal agencies had to plan for the worst and cease operations. The Small Business Administration was one of them.
Ironically, the one federal agency with the sole responsibility of helping small firms was put in the position of not being able to do its job. The shutdown forced SBA to suspend many of its most critical services, including the processing and approval of small business loans. This included the Office of Capital Access and loans made under SBA’s 7(a), 504, and Microloan programs.
As a result, SBA could not approve loans that were already within SBA’s system, nor could they take on any new loans. This essentially froze all SBA-backed lending activity for 35 days. The good news is that the government is open again, and SBA is back to processing and approving loans for small businesses. Yet, I know the agency has much to do in order to adequately ensure the stability of small business financing.
Today’s hearing gives us the opportunity to hear from Associate Administrator for the Office of Capital Access, Bill Manger, about how he and his Office handled the prospect of a protracted lapse in appropriations, the challenges he and his team faced upon re-opening, and what guidance the Office gave borrowers and lenders seeking loan guaranties during the shutdown.
It is important we understand the extent of the economic injuries caused to entrepreneurs as they sought capital – many of whom rely specifically on SBA loans because they’ve had trouble securing affordable credit elsewhere.
I look forward to today’s hearing and thank Mr. Manger for testifying.