RGCI - SBA Releases Its Estimate of the Government Shutdown Impact on Small Business Lending

On October 21, 2025, the Small Business Administration (SBA) released a state-level analysis or estimate of the impact of a government shutdown on small business lending. The shutdown has frozen the SBA’s core 7(a) and 504 small-business lending programs. These lending programs are designed to support small businesses’ access to funds to acquire or improve long-term fixed assets such as real estate, machinery, and equipment.

Both the 7(a) and 504 SBA lending programs provide capital financing to small businesses, but they differ in some respects. The 7(a) program, which may be capped at a lower amount, such as $500 thousand, is thought to be more versatile and can be used even for working capital needs. Whereas the 504 program, which may provide a larger amount, such as $5 million, is designed specifically for long-term assets aimed at business growth and job creation, making it ideal for small businesses in need of significant capital for infrastructure. Lender fees fund both loan programs and operate at no cost to taxpayers.

For the government fiscal year ending on September 30, 2025, SBA had a record 84,400 loans estimated at $45 billion in available capital to small businesses. The chart below shows the state-level impact of SBA-guaranteed loans, estimated at over 1,600 loans and $864 million per week.

State

# of SBA Loans Not Approved (per week)

$ Value of SBA Loan Proceeds Blocked (per week)

California

212

$126,885,142

Texas

128

$88,976,933

Florida

135

$76,862,958

New York

106

$40,067,129

Georgia

49

$34,619,694

Illinois

60

$31,284,460

Colorado

46

$26,411,206

Ohio

67

$26,267,104

Pennsylvania

54

$25,961,288

New Jersey

56

$25,824,965

North Carolina

38

$25,613,956

Washington

45

$24,098,402

Arizona

36

$21,580,506

Michigan

50

$21,476,221

Minnesota

35

$18,011,733

Utah

31

$17,719,531

Virginia

31

$16,748,267

Missouri

25

$15,664,160

Massachusetts

44

$15,059,148

Wisconsin

26

$14,530,523

Indiana

26

$13,376,379

Oregon

25

$11,749,219

Tennessee

20

$11,412,723

South Carolina

19

$11,157,362

Maryland

29

$10,999,708

Nevada

19

$10,052,313

Connecticut

21

$9,223,113

Alabama

13

$8,146,962

Louisiana

12

$7,243,056

Idaho

17

$6,980,173

Oklahoma

10

$6,608,231

Kentucky

12

$5,963,198

Kansas

10

$5,158,863

Arkansas

8

$5,056,804

New Hampshire

13

$4,959,150

Iowa

9

$4,325,304

New Mexico

7

$4,244,733

Mississippi

7

$3,974,600

Nebraska

7

$3,730,073

Montana

6

$3,467,817

South Dakota

5

$3,108,338

Maine

9

$2,853,479

North Dakota

4

$2,811,077

Rhode Island

7

$2,668,988

Delaware

5

$1,959,517

Alaska

2

$1,675,877

District of Columbia

4

$1,664,273

Wyoming

3

$1,627,438

Vermont

4

$1,586,902

Hawaii

5

$1,558,448

West Virginia

4

$1,420,194

What Does This Mean?

It means small businesses may:

  • Need to defer plans for business expansion that potentially create new jobs.
  • Find alternative financing to continue with their plans and timelines.
  • Scrap expansion plans for now and address them at a later time.

Small businesses are generally seen as the engine of the U.S. economy. Small business access to SBA loan programs may be the “kink” in the U.S. economic machine to be overcome, even past the government shutdown.

Understanding the Broader Impact on Small Business Stability

The ongoing shutdown and the freeze of SBA lending programs create uncertainty for small businesses that rely on stable access to capital for growth, hiring, and long-term planning. As organizations navigate delayed financing and shifting timelines, it becomes increasingly important to monitor compliance requirements, maintain accurate financial records, and assess how funding disruptions may affect contract performance. Redstone GCI supports government contractors and small businesses through consulting, operational accounting services, and training that help teams stay prepared and informed, even when external conditions create challenges.

 

Written by David G. Fix, CPA, CFE

David G. Fix, CPA, CFE David (Dave) Fix is a Director with Redstone Government Consulting, Inc. He provides Government Contract Consulting services to our Government contractors primarily related to compliance with Federal Acquisition Regulations and Cost Accounting Standards, equitable adjustment claims, and business systems. Prior to joining Redstone Government Consulting, Dave served in a number of capacities with DCAA for over 35 years. Upon his retirement, Dave was a Regional Audit Manager with DCAA. Dave began his DCAA career in 1986 as an auditor-trainee with the General Electric Suboffice in Pittsfield, Massachusetts. He progressed from auditor to DCAA management ranks serving in DCAA offices in Upstate New York, Columbus, Ohio and Greensboro, North Carolina in audits of major and non-major contractors. Dave served DCAA in three overseas tours, all as Branch Manager, in Kuwait/Iraq (2007), Afghanistan (2010-2012) and Kuwait (2014). Dave was promoted to Regional Special Programs Manager (RSPM) in 2015 before ultimately becoming a Regional Audit Manager (RAM) in October 2019. While a RSPM, Dave worked with DCAA’s other three RSPMs with updating the Agency-wide audit planning process including assigning priorities and determining funded/unfunded audits that is currently being used by DCAA. While a RAM, Dave had overall management responsibility for audits performed by approximately 140 employees including one of DCAA’s largest shipyards. During his career, he served as guest instructor at DCAA’s Defense Contract Audit Institute (DCAI) bringing field perspective to “Advance Auditing Issues” and “Supervisors’ Course” as well as served as a DCAI adjunct instructor over DCAA auditors’ initial two-week training course prior to his retirement. Dave served 36 years in the Air Force Reserve/Air National Guard in both enlisted and officer positions retiring at the rank of Lieutenant Colonel. His last duty station was Air Force Reserve Command (AFRC) Headquarters, Robins Air Force Base, Inspector General Office serving as the Chief, Contracting Inspections leading inspections of AFRC’s 10 contracting offices as well as assisting in inspections of AFRC finance offices. Dave currently specializes in preparing clients for more complex DCAA audits, providing advice on FAR cost principles and contracts regulatory provisions and in assisting clients in anticipating and addressing audit.

About Redstone GCI

Redstone GCI is a consulting firm focused on fulfilling the needs of government contractors in all areas of compliance. With a singular mission to help contractors through the multiple layers of “red tape,” we allow contractors to focus on what they do best – support their mission with the U.S. Government. We are home to a group of consultants made up of GovCon industry professionals, CPAs, attorneys, and retired government audit and acquisition professionals.

Our focus and knowledge of audit and compliance functions administered by DCAA and DCMA will always be at the heart of what we do. However, for the past decade, we’ve strategically grown to support other areas of the government contractor back-office with that same level of focus and expertise. We’ve added expertise in contracts management, subcontract administration, proposal pricing, various software systems, HR and employment law, property administration, manufacturing, data analytics/reporting, Grant specialists, M&A, and many other areas. When we see a trend in the needs of contractors, we act to ensure we can provide the best expertise in the market to fulfill those needs.

One thing our clients can be certain of is that with the Redstone GCI Team in your corner, there is no problem too big and no issue too technical for our team to tackle.

Topics: Compliant Accounting Infrastructure, Small Business Compliance, Government Regulations