Guest post by Matthias Smith, Founder, Pioneer Capital Advisory
When the federal government shuts down its operations, the ripple effects extend far beyond Washington.
In my world, many of the entrepreneurs and business buyers who depend on Small Business Administration financing are in limbo.
As a federal program, the SBA 7(a) loan initiative operates only when the government maintains funding and operations. During the current shutdown, SBA 7(a) loan processing has effectively ceased, creating uncertainty for prospective buyers relying on this critical financing vehicle.
Here’s what the administrator of the SBA had to say about the shutdown on Monday:
Here’s the good news: uncertainty doesn’t have to mean inaction.
While final loan approvals remain contingent on congressional resolution, savvy buyers can, and absolutely should, continue advancing substantial groundwork throughout the acquisition and underwriting process.
The key lies in understanding that while closure awaits Washington’s reopening, preparation continues full speed ahead. This week’s newsletter breaks down the current state of SBA lending and provides practical guidance for navigating business acquisition financing during federal interruptions.
Cliff Notes: What You Need to Know
- SBA 7(a) loan approvals are paused during the shutdown, but nearly everything else in the deal process can move forward
- Use this time strategically: complete underwriting, gather documentation, satisfy loan conditions, and prepare closing packages
- Lenders can issue conditional approvals now – you’ll be first in line when the SBA reopens
- Stay in close communication with sellers and lenders to maintain momentum and trust
- Historical shutdowns have been temporary -preparation now means you’re ready to close immediately when operations resume
Understanding the Impact: SBA 7(a) Loans on Hold
Let’s start with the basics. The SBA 7(a) program is the government’s flagship lending initiative for small business financing, and as a federally administered program, it’s directly tied to congressional appropriations and operational continuity. When the government shuts down, the SBA suspends new loan approvals and guarantee issuances entirely – no exceptions.
Here’s where it gets tricky: even financial institutions participating in the SBA’s Preferred Lender Program – lenders who typically have delegated approval authority – can’t work around these restrictions.
Why? Because they still need SBA-issued loan numbers to finalize guarantees.
For you as a business buyer, this primarily means delays in getting that final SBA loan approval. New applications can’t progress through official channels, and lenders can’t obtain the necessary SBA authorization numbers. Even institutions with delegated authority are unable to issue new guarantees during the shutdown.
The one silver lining?
If your loan already received SBA approval and a loan number before the shutdown, you’re in luck—those deals can proceed to closing and funding.
Strategic Progress During the Pause
A government shutdown doesn’t have to mean a complete standstill in your acquisition journey.
While final SBA approval may be temporarily out of reach, you can make tremendous progress across nearly all preparatory phases. The SBA financing process typically has three distinct stages:
- Pre-Underwriting
- Underwriting
- Post-Approval/Closing
You can navigate most of these independently of SBA operations.
Let’s walk through what you can (and should) be doing right now:
Execute Your Letter of Intent and Compile Documentation
Once you’ve identified an acquisition target and negotiated terms, executing a Letter of Intent (LOI) formally initiates the financing process.
Most SBA lenders require a signed LOI before commencing their evaluation, making this document your authorization to engage prospective lenders actively.
Utilize this period to assemble comprehensive financial documentation:
- three years of business financials, personal financial statements
- tax returns
- all ancillary paperwork lenders will scrutinize.
Essentially, this interval presents an opportunity to construct a complete, polished loan application package without the pressure of pending deadlines.
Select Your Lender and Initiate Underwriting
Government operations need not influence your lender selection or the commencement of underwriting. Banks and SBA lending consultants maintain active operations, capable of evaluating your transaction immediately.
During underwriting, lenders conduct thorough analyses of business financials, business plans, financial projections, and borrower qualifications, all processes that continue unaffected by the shutdown.
Lenders’ credit committees can issue conditional approvals, effectively committing to fund pending SBA guarantee acquisition.
Internal underwriting and credit evaluation proceed at full capacity despite external federal constraints.
As the National Association of Government Guaranteed Lenders (NAGGL) confirms, while lenders cannot submit applications into SBA systems currently, they “can continue to work with loan applicants and complete their internal approval processes so that their loans will be ready to transmit to SBA after the shutdown ends.”
Complete Due Diligence and Satisfy Loan Conditions
SBA loan closings typically require satisfaction of numerous conditions: business valuations, environmental assessments, title insurance, life insurance policies, and entity formation documentation. This interval provides an ideal opportunity to address these requirements proactively. Initiating appraisals or environmental reviews now prevents post-approval bottlenecks and demonstrates commitment to sellers who may harbor concerns about SBA-related delays.
Lenders are adopting parallel strategies: collecting third-party reports, updating financial statements, and essentially completing all activities except securing SBA authorization. This preparation ensures minimal lag between SBA reopening and transaction closure.
Prepare Your Closing Package
Following formal SBA authorization, transactions typically transition to closing procedures: legal document preparation, insurance and escrow finalization, and closing date coordination. Astute buyers can advance much of this groundwork presently. Collaborate with legal counsel on purchase agreement provisions and closing documents that don’t require SBA reference numbers.
The objective is reaching a state where SBA approval represents the sole outstanding component. As industry advisors suggest, position every file such that “the only missing element is governmental authorization.” This “shovel-ready” approach ensures immediate closure capability upon SBA resumption, positioning you advantageously when operations restart and the agency addresses accumulated applications.
About Matthias Smith and Pioneer Capital Advisory:
Matthias Smith is the Founder and Owner of Pioneer Capital Advisory LLC, a Madison, Wisconsin–based commercial loan brokerage firm specializing in SBA 7(a) acquisition financing for business acquisitions across the United States. Since launching the firm in May 2022, Matthias has built an eight-person team that has successfully closed more than 110 SBA 7(a) financings across a broad range of industries.
From January through September 2025 alone, Pioneer Capital Advisory supported 38 clients in completing 40 acquisitions, securing a total of $93.5 million in SBA 7(a) financing. The firm is recognized for its “white glove” approach—running competitive financing processes, presenting deals with analyst-built credit models to the lenders best aligned with each transaction, and providing full end-to-end support. Each client is paired with a dedicated account manager, ensuring a smooth and efficient path from underwriting to closing.
Matthias and his team focus primarily on business buyers seeking SBA 7(a) financing solutions of $1 million or more. Before founding Pioneer Capital Advisory, Matthias worked as an SBA loan closer at four institutions, including Live Oak Bank, Byline Bank, and two Wisconsin community banks.
A strong believer in the American Dream of small business ownership, Matthias is passionate about helping buyers achieve it through thoughtful, strategic financing solutions. Outside of work, he is based in Madison, WI, and is an avid college football fan.
About Calder Capital:
Founded in 2013, Calder Capital is a cross-industry mergers and acquisitions advisory firm with offices across the United States. Calder provides valuation, sell-side, and buy-side services. We are nationally recognized for excellence in advising $1-100M enterprise value transactions in manufacturing, construction, distribution, and business services. Calder serves business owners, entrepreneurs, family offices, financial buyers, and investors. Learn more at www.CalderGR.com.