The Small Business Administration has ran out of money for the disaster assistance loans it provides to small businesses, homeowners, and renters, postponing much-needed relief for those seeking assistance following the devastation wrought by Hurricanes Helene and Milton.
The SBA provides Economic Injury Disaster Loans to firms and individuals impacted by catastrophes. The SBA warned earlier this month that if Congress does not provide more financing, it may run out of funds due to the expected rise in claims from Hurricane Helene.
There are more disaster relief programs available, including help from the Federal Emergency Management Agency, or FEMA. The FEMA help is unaffected by the SBA shortage.
Helene was a Category 4 storm that slammed Florida’s Gulf Coast on September 26, dumping trillions of gallons of rain and wreaking havoc for hundreds of miles across many states. Two weeks later, Hurricane Milton blasted across Florida.
So far, the SBA has received around 37,000 applications for assistance from those affected by Hurricane Helene and made more than 700 loan offers totaling approximately $48 million. It has received 12,000 applications from individuals affected by Hurricane Milton.
The SBA is halting new loan offers until it receives additional cash, so loans that have not yet been provided will be postponed by at least a month. However, SBA Administrator Isabel Casillas Guzman stated that consumers should continue to apply for the loans.
“We know that swift financial relief can help communities recover quickly to stabilize local economies.” Guzman said this in a statement. She noted that the SBA will continue to process applications so that help can be distributed quickly whenever funds are replenished.
The SBA stated that it may be able to issue a limited number of new loan offers during this time if it receives additional revenue from loan cancellations or comparable measures.
House Speaker Mike Johnson indicated that there will be solid support for providing the required cash when Congress reconvenes after the November election.
“There’s no doubt that these devastating back-to-back storms have tested the SBA funding program,” Johnson, a Republican, said in a statement. “But the Biden-Harris Administration has the necessary disaster funding right now to address the immediate needs of American people in these hurricane affected areas.”
The speaker has already rejected to summon members to Washington to vote on help in the aftermath of catastrophic hurricanes, and he will do so again. He stated that Congress is monitoring the situation closely.
“When Members return in just a few short weeks, the Administration should have an accurate assessment of the actual dollar amount needed and there will be strong bipartisan support to provide the necessary funding,” according to him.
The SBA provides two types of catastrophe loans. Business physical disaster loans are used to repair or replace disaster-damaged property, such as real estate, inventory, supplies, machinery, and equipment. Economic damage disaster loans are working capital loans that assist small enterprises, small agricultural cooperatives, small aquaculture businesses, and the majority of private, non-profit organizations in meeting financial obligations that are unable to be satisfied as a direct result of the disaster.
Businesses can borrow up to $2 million. Businesses can borrow at interest rates as low as 4%, while nonprofits can borrow at 3.25%.
The SBA also provides catastrophe loans of up to $500,000 to homeowners to repair or replace disaster-damaged or destroyed property. Homeowners and renters can get up to $100,000 to repair or replace disaster-damaged or destroyed personal property.
FEMA’s disaster relief fund is a collection of funds that the organization uses to respond to disasters. The funds are used to reimburse state and municipal officials for debris clearance and to rehabilitate public infrastructure that has been harmed by disaster. FEMA also provides money to catastrophe survivors for things like rent while their homes are uninhabitable or for emergency necessities like diapers.
FEMA Administrator Deanne Criswell has frequently stated that the disaster assistance fund has the funds to respond to Helene and Milton. But Criswell has stated that the agency will eventually require additional financing from Congress. If that doesn’t happen, the organization will enter “immediate needs funding.” This means that the agency will no longer pay out for earlier disasters and will instead focus its resources on life-saving operations during future ones.