From small businesses to mortgage bankers, some Charlotte-area companies tried to fend off the impact of the governments partial shutdown and said they worried about even worse effects if it lasts much longer.
With the shutdown stretching into its third day Thursday, it threw challenges at companies in the region.
• Companies seeking small-business loans were left in limbo, with no idea of when furloughed federal employees would return to work and be able to process their applications.
• Exporters remained unable to access federal data and federal assistance that they use when looking for markets in which to do business.
• And mortgage lenders, already hammered by a slowdown in refinancing activity, had to tell borrowers their loan applications would face delays.
Some bankers decided not to fund loans until the shutdown ends and they could again access Internal Revenue Service documents.
But others, such as Fairway Independent Mortgage Corp., were funding loans anyway and taking risks in the process.
Tom Tousignant, Charlotte-area manager of the Wisconsin-based company, said the lender was funding home loans even though the IRS was not able to provide tax transcripts. The transcripts are a key document used by mortgage bankers to verify that the information borrowers provide, such as their stated income, is consistent with the information on file with the IRS.
Fairway was taking extra steps to guard against loan fraud, he said, adding that the company wanted to keep serving its clients through the shutdown.
Hopefully, were only dealing with people who filed their taxes and gave us the same thing they filed with the IRS, Tousignant said.
But if borrowers give bad information, Fairway, which sells loans to Fannie Mae, might get stuck with the loans. That could end badly for Fairway, depending on what borrowers do.
If you kept making your payments for 30 years, no big deal, he said. But if you quit making your payments, then weve got a loan that we never should have approved or funded.
Its a risk that were taking.
Also, borrowers applying for home loans through a rural program overseen by the U.S. Department of Agriculture could not close on those loans Thursday, he said, adding that the loans make up 5 to 10 percent of Fairways business in the Charlotte area.
The USDAs essentially been shut down completely, he said. Thats affecting all lenders.
Loans in limbo
President Barack Obama, in a Thursday speech on the shutdown in Rockville, Md., discussed the impact it is having on businesses. Specifically, Obama brought up Small Business Administration loans, saying the applications are in limbo until SBA employees can go back to work.
They might have an application pending as we speak, but theres nobody in the office to process the loan, he said.
George McAllister, regional director of the Small Business and Technology Development Center at UNC Charlotte, said he was fielding questions from Charlotte-area businesses on the SBAs loan programs. Some businesses were interested in getting SBA-backed loans from banks but unsure about how the shutdown might affect the processing of their applications, he said.
McAllister said the SBA furloughs affect all the businesses in Charlotte. He added that the SBAs loan programs are open to about 95 percent of businesses in North Carolina.
McAllister expects the SBA shutdowns effects in Charlotte to be gradual.
As this thing draws out, it could backlog a lot of business owners ability to actually receive funding if their funding is tied to an SBA loan guarantee, he said.
Exporters cant access research
Companies that export were coping this week with the closure of the U.S. Department of Commerces export assistance center on Morehead Street, which provides market research to exporters, said Tim Chappell, president of the Charlotte World Trade Association.
Any resources or knowledge coming out of that office is not available, Chappell said. They are a great resource.
The research and consultations are important for companies looking to trade in countries such as Europe and Asia, he said.
Without that information, he said, exporters would likely put off making some business decisions.
Officials at the center could not be reached Thursday.
Worries about long shutdown
As businesses deal with the shutdown, they say its effects will become more pronounced the longer it goes on.
For the housing market, if the shutdown lasts longer than a week or two, it could have bigger impacts, Tousignant, of Fairway Independent Mortgage, said.
If somebody applied for a loan this week, they might not be able to close in 30 days if the government is still shut down, he said. If this drags on for a little while, its going to start having a significant impact for a lot of homebuyers.
Roberts: 704-358-5248; Twitter: @DeonERoberts
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