If you want the cheapest capital in America, you still go to the SBA. That hasn’t changed in decades. What has changed in 2025 is everything around it: slower approvals, tighter screens, bigger loans going to fewer borrowers—and a federal shutdown that slammed the brakes on the entire pipeline.
This isn’t fear‑mongering. It’s what the SBA is publishing in its own data.
1. The Shutdown Froze the SBA Pipeline—Hard
During the 2025 government shutdown, the SBA calculated that $170 million in SBA‑backed loans per business day were stuck in limbo.
Not paused. Not delayed. Frozen.
That means:
- New 7(a) and 504 approvals couldn’t move.
- Lenders couldn’t submit or finalize applications.
- Deals already underwritten couldn’t close.
Even if you were a perfect 7(a) borrower—strong credit, profitability, years in business—you were simply out of luck until Congress restarted the government.
This matters because SBA lending is already slow in normal times. A 60–90 day process becomes 90–120 when you lose 2–3 weeks of government operations.
2. Approvals Haven’t Collapsed, But Lending Behavior Has Shifted
Recent SBA data doesn’t show a dramatic, headline‑level collapse in approval counts. But the SBA’s Lender Activity Reports (updated monthly on data.sba.gov) reveal something more meaningful: a shift in lender behavior rather than a drop in total volume.
Specifically, the data shows:
- Fewer loans being approved overall, but at larger average dollar amounts—a sign lenders are prioritizing stronger borrowers.
- Longer processing times, even before the shutdown impact fully hit.
- More conservative underwriting tied to SOP 50 10 8 (June 2025), which added documentation requirements and slowed pipelines.
In other words: the SBA hasn’t “collapsed.” It’s tightened.
3.. SBA Rates Are Still Some of the Lowest Realistically Available to SMBs
Even with the tighter environment and slower processing, SBA 7(a) loans continue to offer:
- Prime + 2–2.75% rates (≈ 10–11% today)
- Long terms (up to 10 years)
- Predictable monthly payments
Are SBA loans cheaper than traditional bank loans? No. A tier‑1 borrower with excellent credit, strong profitability, and clean financials can often get an even lower rate from a conventional bank term loan.
But here’s the truth that actually matters for most small businesses:
Traditional bank term loans have extremely high credit bars. SBA loans are often the lowest‑cost capital that the average SMB can realistically access.
And compared with fintech term loans (35–60% APR) or MCA-style fee structures (70–150% APR), SBA financing remains dramatically more affordable.
Affordability only matters if you can actually get approved. SBA Rates Are Still the Cheapest Money in the Market**
Even with everything above, the SBA 7(a) program still offers:
- Prime + 2–2.75% rates (≈ 10–11% today)
- Longer terms (up to 10 years)
- Reasonable monthly payments
Against fintech rates (35–60% APR) and MCA rates (70–150% APR), SBA lending remains the only truly affordable growth capital for many businesses.
But affordability only matters if you can actually get approved.
In 2025, that’s become harder.
4. Why Brokers Don’t Talk About This
This part is simple: brokers rarely push SBA loans because they can’t hide a fat commission inside them.
An SBA loan might pay a broker 1–2 points—maybe.
A fintech term loan can pay them 8–12 points, sometimes more.
So brokers do what brokers do:
- Ignore the SBA altogether.
- Tell you banks “aren’t lending.”
- Funnel you into the highest‑commission product.
The SBA slowdown and shutdown delays make this worse. As soon as borrowers get anxious, the broker industry pounces.
5. What Small Business Owners Should Do Right Now
Here’s the real guidance, minus the sales pitch:
If you have time (45–90 days):
- Apply for an SBA 7(a) loan while the program is still the cheapest capital in the market.
- Prepare for more documentation than prior years.
- Avoid anyone who says they can “fast‑track” an SBA approval. They can’t.
If you need money fast (under 30 days):
- SBA is off the table. No lender—not even fintech SBLC pilots—can compress the SBA’s process meaningfully.
- Fintech loans or embedded lending (Stripe/Shopify/Square) will be your actual options.
- Focus on APR and total payback, not fee‑based marketing language.
6. Where This Goes Next
SBA lending won’t disappear. If anything, once the shutdown shock is fully cleared, volume will likely rebound. But the trend is clear:
- More documentation
- More compliance
- More cautious lenders
- Stronger businesses getting priority
For everyone else, fintech fills the gap—expensively.
Next Steps for You
- Calculate your true cost of capital. Use our APR Calculator to translate factor rates, fees, and holdbacks into a single APR.
- Ask Diogenes whether borrowing even makes sense for your situation, and what type of lender is the best fit.
- Avoid brokers. If someone’s pushing speed over cost, it’s because speed pays them more.
Bottom line: 2025 is the year SBA lending didn’t collapse—it just became slower, stricter, and harder to access. And when the pipeline froze during the shutdown, small businesses got a preview of what life looks like when affordable capital disappears.
Don’t wait for the next bottleneck. Plan ahead, run the math, and keep brokers out of the equation.