The Federal Loan & Grant Freeze doesn't affect Business: Here's why

The White House has revoked an order authorizing a federal freeze on hundreds of billions of dollars in grants and loans, which had caused widespread panic among those relying on government aid. This decision follows a judge's temporary halt of the order, issued just hours after President Trump signed it. The judge's pause will last until next Monday, pending a lawsuit filed by organizations representing grant recipients. Despite the rescission of the memo, the White House maintains that the federal funding freeze is still in effect, aiming to end confusion caused by the court's injunction.

[Photo: Department of Defense]

The initial order from the Office of Management and Budget (OMB) had instructed agencies to temporarily pause all activities related to federal financial assistance, intending to give the new administration time to assess which grants and loans align with their agenda. This move led to confusion about which programs would be impacted, with some aid groups warning of service suspensions. The White House defended the freeze as reasonable, while Democrats expressed alarm and shifted their focus to condemning the decision.

Amid the confusion of the memo, some lenders believe SBA loans will likely remain unaffected. Chris Hurn, CEO and president of Phoenix Lender Services, an SBA lender, explained in a statement:

“These government guarantees (think of it like ‘insurance’) are paid for with fees from both borrowers as well as lenders,” he said. “These are not ‘awards’ as described in this memo, and loan recipients undergo a thorough credit underwriting process. SBA government-guaranteed loan programs operate at a zero subsidy to taxpayers, which means losses on their loans are (more than) covered by these fees. In fact, the agency usually produces a surplus in fees to cover off losses. Much of, if not all of, the rest of the ‘grants and loans’ targeted in this memo are not at ‘zero subsidy’ nor do they produce surpluses for the federal government.”

As stated by Chris Hurn, its quite likely the SBA will be unaffected. You can still receive the funding required for expansion or any other reason. We offer a variety of SBA Programs which could be your financial solution.