SBA Shortfall Coming?

Though we don't expect this to be a major problem, the SBA may exhaust its budget before the fiscal year ends on September 30, 2011. The biggest impact, if any, would likely be on refinance transactions.  In rough numbers, about $1.20 billoon of SBA loans are being funded each month, and with 9 weeks remaining, the $2.5 billion in funds could run out before September 30, 2011. At this pace, the shortfall would be short-lived.  However if there is a late surge in demand, this gap could widen and impact your ability to receive SBA financing.

So in early September, the SBA might require that 7a refinance loans be put in a queue so that purchase transactions take precedence.  Purchase loans, are thought to create new jobs more so than refinances, and that would take priority (i.e. refinance loans could receive lower priortity). And shortly thereafter, about September 15th, all SBA 7(a) loans might be required to go into a queue so that the SBA can select which will receive priority to fund. 

If you are sitting on the fence with an SBA loan request, you may want to go forward now to avoid the above.  SBA 504 loans aren't expected to be part of this queue process.