ICBA reviewing impact of Trump administration freeze on SBA programs

ICBA is reviewing the community banking industry impact of the Trump administration’s pause to some federal agency grant and loan programs, which has been temporarily blocked by a federal judge until Monday.

Small-Business Exemption: In a memo issued Tuesday, the Office of Management and Budget said the pause does not apply to funds for small businesses, farmers, and similar programs. The memo notes the pause is limited to programs and activities affected by Trump’s executive orders.

ICBA Review: ICBA is reviewing the potential impact of the pause on federal programs and working to ensure programs involving community banks, including the Small Business Administration’s 7(a) and 504 programs, are unaffected.

Temporary Pause: The OMB’s clarification followed a memo issued to the heads of executive departments and agencies on Monday that said federal agencies must temporarily pause activities related to obligation or disbursement of federal financial assistance. In both memos, the OMB said the pause does not apply to assistance provided directly to individuals, specifically noting that Social Security and Medicare benefits are not affected.

Agency Reviews: The OMB directive also requires each agency to complete by Feb. 10 a comprehensive review of federal financial assistance programs subject to the pause to ensure they align with the president's executive orders.

Budget Impact: The OMB said the federal government spent more than $3 trillion on financial assistance, including grants and loans, in fiscal 2024.

Court Block: U.S. District Judge Loren AliKhan temporarily blocked the freeze on Tuesday afternoon. As reported by the Associated Press, the administrative stay pauses the freeze until 5 p.m. Monday, Feb. 3.