SBA Update IRT Gov Shutdown from FranData- applies to all SBA lending

Hi All, below is an email I got from FranData with great information about how the shutdown is affecting SBA lending as well as an interesting update on broker rules. The info applies to everyone but there are some franchise specific info as well. if you are in the franchise space and don't subscribe to their info, I would recommend it. ____________________________________________________________________________________ As the federal shutdown extends, SBA lending activity has largely come to a halt, and lenders are bracing for a more cautious environment once operations resume. Here’s what’s happening and what it means for franchise financing: ALL SBA Loan Approvals Are on Hold - E-Tran is closed for new loan approvals BUT lenders can continue to process loans up to the point of submission to SBA - Loan increases and reinstatements are suspended. - Verification systems (IRS and non-citizen checks) are offline, preventing lenders from closing even fully approved deals. - Lenders can process loans up to submission, but no new approvals will move forward until the SBA reopens. A Lending Backlog Is Building - Thousands of pending loans are now waiting in queue. - When SBA operations restart, processing delays are expected as lenders push through accumulated files. - Lenders are likely to prioritize low-risk, well-documented franchise systems as they work through the backlog. Heightened Scrutiny of Broker-Referred Deals - SBA has extended its lookback period to 10 years and is reviewing past broker-originated loans. - Lenders are now fully responsible for verifying all referral sources, even if multiple brokers were involved. - No official list or clear standards have been provided—creating uncertainty and driving more conservative lending decisions. - If a loan fails and is tied to an unverified broker, SBA may deny the guarantee, exposing lenders to additional risk. Short-Term Impact on Franchise Borrowers - Expect slower approvals, tighter underwriting, and more documentation requests from lenders. - Deals involving broker referrals or incomplete eligibility documentation will face longer review times.