Small Business Administration disaster loan program is out of money after back-to-back hurricanes
A sign for a Small Business Administration business recover center following the collapse of the Francis Scott Key Bridge April 2 in Baltimore.
Washington (CNN) — The Small Business Administration’s disaster loan program has run out of funding due to high demand from constant extreme weather disasters, the administration announced Tuesday.
In a statement, President Joe Biden called the SBA’s exhausted disaster loan program “a critical lifeline to small businesses, homeowners, and renters affected by disasters.”
The SBA’s disaster fund running out of money could force Congress to address the dire situation with disaster relief funding once lawmakers return to Capitol Hill in November.
“Speaker Johnson has promised that this and other disaster programs will be replenished when Congress returns, so Americans should continue to apply for these loans,” Biden said in a statement, adding the SBA “will continue to process applications and will disburse loans as soon as Congress provides the needed funding.”
The SBA’s fund is different than the Federal Emergency Management Agency’s disaster relief fund, which provides assistance to individuals impacted by hurricanes. FEMA’s fund stands at $8.5 billion as of Tuesday, a FEMA spokesperson told CNN.
The SBA will pause new offers for its direct and low-interest long-term loans to disaster survivors until Congress approves more money for the fund, according to a news release. However, it is encouraging small business-owners impacted by Helene and Milton to continue applying for relief.
“While we await Congress to provide much-needed funding, we strongly encourage eligible businesses and households to apply for SBA disaster loans,” Administrator Isabel Casillas Guzman said in a statement. “SBA will continue to support homeowners, renters, businesses and nonprofits in processing their applications to ensure they receive assistance quickly once funds are replenished.”
The balance of the fund has been dropping continuously as the agency has been responding to powerful back-to-back hurricanes Helene and Milton. The spokesperson reiterated FEMA has the funding it needs “to continue response and recovery efforts” for both hurricanes.
After getting an infusion of around $20 billion from Congress to respond to hurricane season, FEMA has spent around $11.5 billion of its Disaster Relief Fund in about two weeks. It had spent $9 billion before Milton made landfall in Florida last week. A significant chunk of the money already spent went to reimbursing other states for earlier disasters, which FEMA was able to do after it came out of immediate needs funding on October 1.
This rapid spend rate reflects just how many disasters have struck the US through summer – which the agency is still responding to – before Helene and Milton made landfall.
The SBA has gotten about 37,000 applications for relief from those impacted by Hurricane Helene and has already made over 700 Helene loan offers totaling about $48 million. The SBA has received over 12,000 additional applications from Hurricane Milton survivors.
The-CNN-Wire
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