The government is shut down, again.
It’s happened more times than it should in recent years, to the point that most people feel like it’s so old hat that it really doesn’t have much impact on their lives.
However, if you’re in the market to buy a business or are currently trying to sell your business, the government shutdown could have a major impact on your transaction.
Traditional lending institutions like banks are typically gun-shy about financing small business transactions, especially with the financial crisis of 2008 relatively fresh in everyone’s mind – so many buyers turn to the SBA in order to finance the purchase a business when a full cash offer is not an option. Many sellers also take steps to ensure that their business would qualify for SBA loans when they are preparing to list, as the possibility of SBA financing can be a draw for potential buyers.
SBA financing is very common in the small business world and can be a very useful tool to get a deal to the closing table, but since the SBA is a government entity it requires the government to be up and running to be able to use it. A government shut down means the activities of the SBA are suspended – so no financing can go through.
If you are looking to buy a business, the government shutdown and suspension of SBA means you may have to put your buying plans on hold until the government is back up and running. If you are a business buyer or seller with a deal in the works, it may mean a pause in your transaction until the funding can go through.
What should you do if you are a buyer or seller and are concerned about the impact of the shutdown? Talk to your business broker. We have, unfortunately, been through this before, so we can talk through any and all potential options and decide on the best course of action for your particular circumstance. Overall, the best advice would be to stay patient and understand that this political tool doesn’t last forever. SBA will be back up and running soon.
A note to sellers – you should be patient with the other side of your transaction because it isn’t their fault the financing has been put on hold. A buyer who needs the SBA to buy your business can’t do anything if the SBA isn’t open.
Will the shut down last forever? No, it won’t. Will this kind of thing happen again? Unfortunately, it probably will. Stay calm, try to be patient and discuss options with your broker.
Are you looking for businesses to buy and want to know about funding options besides the SBA? Are you a seller who wants to know more about finding out if your business would qualify for SBA financing? Leave any questions or comments here and we would be happy to help.
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