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Local SBA, USDA Loans Affected By Government Shutdown

By Johanna Cano, posted Jan 11, 2019
With the partial federal government shutdown reaching the end of its third week, certain local activities, such as SBA and USDA loans, have been affected, while other regional operations continue with business as usual.

The U.S. Small Business Administration stopped operating until further notice because of a lapse in funding due to the government shutdown.

This means that SBA business loans are not being processed, leaving business owners who are seeking funding in limbo. 

Live Oak Bank, the second-largest SBA lender in the tri-county region last fiscal year, according to data from the agency, is keeping an eye on the possible effects of the SBA shutdown.

“We continue to monitor the situation, like any bank that utilizes the SBA and USDA loan programs,” said Claire Parker, spokeswoman for Live Oak Bank, in an email. “We are working closely with borrowers to understand how the shutdown is impacting them and will continue to stand by their side through the shutdown and beyond to ensure they are able to successfully run their businesses.”

The U.S. Department of Agriculture has also not been operating due to lack of funding, meaning USDA mortgage loans have not been processing.

USDA loans provide a zero down payment option for families that meet income requirements seeking a home in an eligible rural area.

Chad Ludwig, co-owner of Coastline Mortgage Consultants, said the only issue they have experienced from the shutdown is with the USDA not accepting or issuing new commitments for mortgage loans.

Jessica Keenan, broker in charge at Nest Realty’s Carolina Beach office, said many of the loans she has worked on have been closing with no problem, including VA mortgage loans available to veterans.

“If you are doing a conventional loan, which is more typical, you might not see anything,” Keenan said. “But FHA-insured loans, for example, might have some slowdowns. I am closing a VA loan on Monday, and I didn’t have any slowdowns.”

Despite some loan delays, Alpha Mortgage has not been impacted by the shutdown, and it has been having business as usual, officials there said.

USDA loans make up 10 percent of Alpha Mortgage’s business, said Michael Lopez, owner of Alpha Mortgage.

“The only thing that has been affected are USDA loans; everything else hasn’t been affected,” Lopez said. “The interest rates have actually come down a little bit, so it’s been better for our customers.”

Brokers at Alpha have been putting USDA loans in the queue waiting for the Department of Agriculture to process them.

The North Carolina ports have been operating normally and have not been affected by the shutdown, N.C. Ports spokeswoman Bethany Welch said in an email.

The regional Small Business and Technology Development Center, which is affiliated with the University of North Carolina Wilmington and in a formal partnership with the SBA, has not been affected by the shutdown, said Heather McWhorter, regional director at SBTDC.

Help for those affected by the shutdown is coming from the Cape Fear Public Utility Agency.

Federal employees affected by the federal government shutdown can get adjustments for late fees from CFPUA, or request other financial arrangements for bills, according to a news release.

Impacted federal employees can contact customer service for bills received after Dec. 11.

“We recognize the situation that local federal employees find themselves in,” Jim Flechtner, CFPUA executive director, said in a release Friday. “We want to do what we can to help ease their burden until the federal budget impasse is resolved and their pay resumes.”
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