The temporary federal government shutdown is dealing a severe blow to Korean American and nationwide small businesses. This is because the SBA loan program—a key funding source heavily relied upon by small businesses—has been completely suspended due to the shutdown.

According to the U.S. Small Business Administration (SBA) and Korean American banking sources on the 5th, since the federal government shutdown began on October 1, all SBA operations have been fully halted, including the receipt, review, and approval of loan documents. For the SBA’s flagship 7(a) loan program, widely used by Korean American business owners, funding is provided by banks and financial institutions, but federal government approval is mandatory before funding can proceed. This is because the federal government guarantees the loans under the 7(a) program, making lending impossible without government approval

.Korean American banks have completed loan application documents for Korean business owners since October 1 but are now simply waiting for SBA operations to resume. One Korean American bank official stated on the 5th, “We’ve finished preparing all the application documents but can’t even submit them to the SBA. It’s incredibly frustrating to just wait for operations to restart.” The official added, “We keep explaining the situation to customers and asking for their understanding, but it’s heartbreaking for Korean business owners who want to acquire or expand their businesses through funding.

”Another Korean American bank official said, “SBA loans are one of the major revenue sources for Korean banks, and with operations halted for over a month, the banks are also taking a hit. We’re just hoping the shutdown ends as soon as possible. ”The SBA also issued a notice stating, “The longer the shutdown continues, the more hundreds of small businesses are unable to access billions of dollars in funding needed for daily operations each day,” while asking for understanding from financial institutions and customers.

Korean American banks consistently rank among the top nationwide in SBA lending, making the impact of this shutdown particularly significant. In fact, the Korean banking sector anticipates unavoidable declines in revenue and net profit in the upcoming fourth-quarter results due to the SBA shutdown. According to the SBA’s most recent data for fiscal year 2025 (October 2024 – September 2025), 15 Korean American financial institutions issued a total of $1.8375 billion in SBA loans, a 25.8% surge compared to $1.35345 billion in the same period the previous year. The total number of loans during the same period also rose to 1,577, up 32.5% from 1,190 the year before.

In fiscal year 2025, a total of 1,421 financial institutions nationwide issued SBA loans, and six Southern California-based Korean banks—Bank of Hope, Hanmi Bank, PCB Bank, Open Bank, CBB Bank, and US Metro Bank—all ranked in the top 100 lenders, underscoring their prominence. The reason Korean financial institutions focus heavily on SBA loans is that under the SBA 7(a) program, the SBA guarantees up to 75% of the loan amount, significantly reducing the risk of losses from non-performing loans. Additionally, SBA loan portfolios can be bundled and traded among financial institutions, making them a key revenue source.