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The government shutdown is creating delays for house buyers, particularly in parts of Minnesota outside the Twin Cities. It is also slowing financing for small-business owners and may delay an acquisition by the state’s biggest company.

After the first full business week since the shutdown began, executives and entrepreneurs are starting to see more widespread effects. The flow of money, particularly support from government agencies, is slowing in some industries, including real estate.

“We are not able to generate new government-guaranteed loans, or even get the applications in, using the Small Business Administration or the Farm Service Agency loan programs,” said Jay McDougall, marketing manager at Frandsen Financial, an Arden Hills bank. “Any new business that will use these programs will have to wait until the shutdown is over.”

Lenders who are underwriting U.S. Department of Agriculture (USDA) mortgages, chiefly used in rural areas and small towns, are unable to obtain any conditional commitments or guarantees. That means all the loans using this type of financing are stalled.

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“It’s a small percentage, but probably a big number that adversely affects rural America,” said Keenan Raverty, a former president of the Minnesota Mortgage Association and vice president with Twin Cities-based Bell Banks. “Even 100 deals in outstate Minnesota is pretty impactful.”

One in five mortgages in Minnesota are backed by government agencies, including Federal Housing Administration (FHA), Department of Veterans Affairs and the USDA, according to the Mortgage Bankers Association of America.

Buyers who are already unable to qualify for a conventional mortgage are most likely to find themselves in limbo.

The shutdown of the SBA may lead some small firms and entrepreneurs to put off acquisitions, deals and other transactions. “We have eight loans pending [in just one community-lending program] that are in limbo,” said Gary Cunningham, chief executive of Minneapolis-based Metropolitan Economic Development Association, which counsels and helps finance small minority-owned businesses.

Neighborhood Development Corp. of St. Paul, also an SBA community lender, has two inner-city projects awaiting construction funding, said its chief executive, Mihailo Temali.

Hiring paperwork

With operations at the Internal Revenue Service and the Social Security Administration temporarily suspended, there could be some processing delay as the agencies work through a backlog of requests for W-2 forms, tax transcripts and Social Security number verifications.

Tom Goyda, a spokesman for Wells Fargo Home Lending, said the company isn’t yet receiving a lot of calls from borrowers who are behind in their payments. “As time goes by, we can’t predict what will happen,” he said.

The state’s largest company, Minnetonka-based UnitedHealth Group, is still waiting for a review by the Federal Trade Commission (FTC) to finish into the purchase it announced in late 2017 of DaVita Medical Group, a chain of clinics.

The $4.3 billion deal would significantly expand UnitedHealth’s push into the operation of medical clinics. “We say the FTC review is ongoing. That is not technically true as long as the shutdown is going on — it’s not ongoing,” Kent Thiry, the chief executive at Colorado-based DaVita Inc., told investors earlier this week.

The deal was initially supposed to close last year and the two companies last month agreed to lower the deal value by $500 million. Thiry said executives still hope to close the deal early this year.

Med-tech product limbo

AdvaMed, the Washington-based trade group for the med-tech industry, said manufacturers are concerned that the lapse of oversight at the Food and Drug Administration (FDA) will delay new product reviews and approvals.

The FDA operates in part on user fees, including fees paid to review applications for new products.

Even so, the agency cannot accept fees for new applications submitted after the FDA’s general funding lapsed on Dec. 22.

A spokesman for Medtronic Inc., the nation’s largest medical device firm, which has its operational headquarters in Fridley, said it hasn’t experienced any meaningful impact on product approval timing.

“Our FDA approvals expected in the next one to two quarters that are likely already under review should not be impacted. But we continue to monitor the situation closely,” Medtronic spokesman Fernando Vivanco said.

Mark DuVal, president of the Minneapolis device-and-drug regulatory law firm DuVal & Associates, said some clients are seeing delays in reviews. “Compliance matters, like responses to inspections or warning letters, seem to be affected as well, although we were told they would not be,” DuVal said.

The Medical Alley Association, the Minnesota-based trade group for health tech companies, said the shutdown could have a negative impact for many of the smaller companies around the state. “The medium- and long-term impact will be felt by public health as fewer health advancements come to market,” said Frank Jaskulke, an association executive.

Staff writers Joe Carlson and Christopher Snowbeck contributed to this report.