On Monday evening, the Office of Management and Budget (OMB) ordered all federal agencies to temporarily suspend grant and loan payments, with the exception of Social Security, Medicare, and “assistance provided directly to individuals.” In the internal memo, OMB’s Acting Director, Matthew Vaeth, calls for each agency to undertake a comprehensive analysis to ensure all grant and loan programs comply with the Administration’s Executive Orders. The pause applies to an estimated 2,600 accounts across the federal government, and details are still being worked out on federal funding that is statutorily obligated.
While intended to be temporary, the duration of the pause may vary by Department and program. Each federal department and agency are likely to interpret its scope and requirements differently and prioritize review of certain programs before others. This pause may have a profound effect on clients who were expecting to receive federal funds within the next two to six weeks. While the pause has the potential to affect any business or entity receiving federal grants or loans, clients receiving such funds as part of programs related to DEI initiatives, foreign aid, or federal clean energy investments, specifically electric vehicles, may be most impacted.
Some of the questions agencies must answer in the report for OMB include whether or not the program supports illegal immigrants, if the program supports abortion, gender ideology or DEI initiatives, or if the program supports activities that impose an undue burden on the identification, development, or use of domestic energy resources. It’s important to note, only a handful of President Trump’s cabinet secretaries and agency heads have been confirmed, making this process all the more complicated.
Key Facts
- All federal assistance – with the exceptions listed above – will be paused starting today, January 28, at 5:00 pm ET.
- This affects ALL federal agencies.
- The government-wide freeze is temporary and is intended to allow each agency to conduct a comprehensive analysis of all federal financial assistance programs to identify programs, projects, and activities that may be implicated by any of the President’s Executive Orders.
- Agencies have until February 10, 2025, to submit to OMB detailed information on each program subject to this pause.
The freeze will include:
- Issuance of new awards;
- Disbursement of Federal funds under all open awards; and
- Other relevant agency actions that may be implicated by Trump’s Executive Orders until OMB has reviewed and provided guidance based on what is received.
Could this Affect You?
Yes, if your business receives federal grants or loans, the pause will almost certainly affect you until at least February 10th and potentially beyond. If your company is concerned about the funding pause, or you are impacted by any of the recent Executive Orders, it is critical to determine the risk posed by the pause or Executive Order and to develop a response that evaluates both their legal and political options.