Bruce Lammers saw the government shutdown coming, but he didn't want to believe it would really happen.
Now it's only the triage business planning he developed that's keeping his bank thriving -- for now.
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Lammers is the CEO of Ridgestone Bank. The organization has only two branches, one in Schaumburg and one in Brookfield, Wis. But the small bank has managed to become the largest Small Business Administration lender in Illinois, sixth-largest in the nation.
In the fiscal year that ended Jan. 31, Ridgestone Bank reported processing $55.3 million in federally backed loans for small businesses. That activity is nearly at a dead stop. The federal shutdown freezes all new SBA loans until government funding is restored.
"It's a big part of our business," Lammers said. "You keep reading about stress testing of banks, but nobody really defines what that is. I think it's looking to see what could go wrong. This is something that has gone wrong. And right now we're looking at the stresses and asking whether or not we can keep our shareholders and customers happy."
In the short term, the answer is yes for Lammers. In preparing for the worst, Lammers made sure all loan applications were prepared and ready to go as soon as the federal government comes back online. That's created a "runway" that will ensure Lammers' customers are served for up to three weeks.
But until the Small Business Administration receives a budget, Lammers' bank will have to carry the full weight of those loans as there is no federal backing to guarantee the loans are made good.
"We're still in business, but it's a disruption," Lammers said.
He's not sure he can say the same about small businesses who use the SBA loans for working cash to meet payroll or create new jobs through business expansions.
"We've taken a look at what happens if we weren't able to make SBA loans in the long term, and we would survive," Lammers said. "But we wouldn't be able to help a significant portion of our customers meet their needs. We wouldn't be able to help people create jobs and earnings that pay taxes."
Uncertainty in the business world is often cited as a reason the economy has been slow to rebound, Lammers said. The government shutdown will only intensify that uncertainty.
"Businesses are uncertain of the impact of regulations, the uncertainty of the new health care laws, the uncertainty of government involvement, and this is another very good example of why," Lammers said. "If the shutdown goes on for a protracted period of time, it's going to hurt job sustainability and the ability to create jobs.
"All our SBA loans either create jobs or save jobs," he said. "It might be only five jobs at a time, but that makes an impact. These loans are an economic development tool, and now it's not available."
Lammers said the blame for all the negative effects rests with Congress as a whole.
"I'm disgusted by all the people that are supposed to represent us," Lammers said. "I'm not talking about any one party. We should have a recall election on all of them."
Ridgestone Bank is not the only local financial institution affected by the SBA loan freeze. A total of 94 different lending institutions processed $225.4 million of the most common kind of SBA loans in the last fiscal year, according to the Illinois District office of the U.S. Small Business Administration.