Kelly Loeffler, the former U.S. senator and business executive, told CBS News on Sept. 28 that a lapse in federal appropriations would “cut off small business loans,” drawing attention to how a government shutdown could interrupt federally backed lending programs relied upon by communities nationwide.

Loeffler framed her comments around the immediate operational effect of a funding lapse: when Congress fails to pass appropriations, many federal agencies rely on contingency plans that furlough employees and curtail routine services. For small businesses and the community banks and credit unions that work with them, that can mean delayed application processing, suspended guarantee decisions and a slowdown in the flow of capital that businesses count on for payroll, rent and investment.

“Small employers don’t have the luxury of waiting while lawmakers sort out budget fights,” Loeffler said in the interview. Her statement echoed concerns voiced in previous shutdowns, when agencies including the Small Business Administration scaled back nonessential functions and some loan programs were delayed as staff were sent home or shifted to limited operations.

The mechanics are straightforward: many federally backed loan programs require agency staff to underwrite guarantees, issue approvals and manage funding lines. While banks can continue to originate privately funded credit, the loss of federal guarantees or processing capacity can make lenders more cautious and increase credit costs for small borrowers. That risk is heightened in regions where federal programs are a major source of lending, particularly for startups, minority-owned firms and disaster-affected businesses.

Policy experts say the precise effects depend on which programs and offices are deemed essential and the duration of any lapse. “A short shutdown might cause processing delays; a prolonged one can chill lending decisions and raise insolvency risks for already fragile firms,” said a policy analyst who studies credit markets. Historical precedent shows that repeated interruptions to federal services can have outsized economic and political consequences, particularly for small employers operating on thin margins.

The warning comes amid partisan disputes over appropriations language and spending levels that have made last-minute stopgap measures increasingly common. Congressional leaders face choices about whether to pass short-term continuing resolutions, fund specific agencies, or attach broader policy riders that could complicate negotiations. How lawmakers vote in the coming days will determine whether federal lending functions are maintained.

For small-business owners already navigating tight credit conditions and supply-chain strains, the prospect of interrupted federal support adds a new layer of uncertainty. Community bankers say they are monitoring contingency plans closely; lenders dependent on SBA guarantees, disaster assistance, or specialized rural and minority-business programs are particularly anxious about any operational gaps.

Loeffler’s public admonition frames the shutdown debate in practical terms: beyond headlines about federal parks and pay for air traffic controllers, there are technical, contractual and staffing realities that shape whether money flows to the street-level borrowers who sustain local economies. As Congress prepares for another round of votes, the stakes for Main Street will be part of the political calculation even as lawmakers haggle over spending priorities.