Before I jump into the newsletter, a quick note about an upcoming event:

Fireside Chat in Salt Lake City – Join us on October 29th from 7 pm to 9 pm Mountain Time at SLX Work Club for an intimate, relaxed conversation about business acquisitions, financing strategies, and current market opportunities. This is a fantastic chance to ask questions about the lending environment, discuss deal structures, and network with other acquisition entrepreneurs in the Mountain West region. We're keeping it casual and interactive - come with your questions! Learn more and register here.

Navigating SBA Financing During the Government Shutdown

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:

​

Kelly Loeffler @SBA_Kelly It’s Day 27 of the shutdown. As of today, SBA has been prevented from delivering $3B in guaranteed loans to Main Street. It’s just part of the reason that 72% of small businesses say they need the government reopened. Senate Democrats should listen. https://www.axios.com/2025/10/20/small-businesses-pause-hiring-amid-shutdown axios.com Why small business is worried about the gover... Survey respondents are sounding the alarm to Washington, and perhaps to Wall Str... 1:24 PM • Oct 27, 2025 220 Retweets 877 Likes Read 93 replies

​

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:

1. Pre-Underwriting
2. Underwriting
3. 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.

Connect With Us: Let's Talk In Person

Booth-Kellogg ETA Conference in Chicago – Mark your calendar for November 19th when we'll be participating in one of the premier entrepreneurship through acquisition conferences in the country. Hosted by Northwestern's Kellogg School of Management, this gathering brings together aspiring entrepreneurs, seasoned searchers, investors, and service providers from across the ETA ecosystem. Whether you're exploring your first acquisition or expanding your portfolio, this conference offers incredible insights and networking opportunities. We'd love to connect with you there! Registration details available at: https://www.etaconference.com/

We genuinely look forward to meeting many of you in person at these events and continuing the dialogue about successfully navigating business acquisitions—in any economic environment.

For pre-LOI buyers ready to explore opportunities: Schedule a meet & greet call

Already have a deal under LOI and need financing help: Schedule an LOI consultation

Got questions or just want to chat? Drop me a line directly at matthias@pioneercap.com

Disclaimer: The information in this newsletter is for informational purposes only and should not be considered legal or financial advice. Business buyers are encouraged to consult with their legal counsel and accountant to ensure the proper structuring of their transactions and to fully understand the tax implications of seller financing.

Thanks for reading! Feel free to reply directly to this email with any questions or thoughts.