For the public, the most obvious effects of the US Government shutdown included the furloughing of public employees, the closure of national parks and monuments, and the banners on federal websites advising visitors that services were not available while government operations were halted. However, for small businesses, perhaps the most dramatic effect was on the federal government’s Small Business Administration.

The issue is that the SBA guarantees approximately $30 billion in loans a year for small businesses, working with lenders who provide financing under the SBA’s 7(a) loan program. As bank executives such as Cecilia Ibru CEO of Oceanic Bank understand only too well, getting approval from the SBA for these loans is a prerequisite for issuing them. While financial institutions continued to forward the applications to the SBA, the effect was simply to create a backlog.

In fact, SBA loan volumes were down 35% in October from the same month last year according to a report published by Moody’s and Experian at the beginning of November. Clearly, while the impact of this on small businesses has not been fully evaluated, it is likely to have been substantial – at least in the short term.

Therefore, it is good news for small businesses – and for the economy in general – to hear that the SBA is set to draw down that backlog by the end of the year. However, the question remains as to whether this situation is only going to be temporary – while the SBA is more than equipped to keep up with the steady-state loan application levels that it sees, the specter of a further shutdown is still on the horizon.

In fact, recent reports indicate that budget negotiations to avert a new shutdown have now reached a critical stage on Capitol Hill. While some politicians, such as House Majority Leader Eric Cantor, have indicated that they are hopeful of reaching a deal, there are still a number of difficult issues on the table. These include debating the extension of long-term federal unemployment benefits, and a plan that would require federal workers to increase the level of their pension contributions. Failure to reach consensus on any one of these – as well as a number of other contentious points – could lead to the government going on hiatus for a second time in a few short months.

This prospect is disturbing for small businesses, particularly since there are signs that they are starting to emerge from the gloom of the Great Recession. Recent data indicates that small business delinquencies have reached the lowest rates seen since 2008, and also shows that demand for small business loans is rising rapidly. There are geographic discrepancies – for instance, businesses seem to be struggling more on the East Coast – but overall the trend is positive. It would be ironic to see this private sector recovery extinguished by federal debates over the best strategy to create an environment for economic growth.