NEW YORK (AP) — The Small Business Administration has run out of money for the disaster relief loans it provides to small businesses, homeowners and renters, delaying much-needed relief for people applying for aid in the wake of the devastation caused by the Hurricanes Helene and Milton.
The SBA offers economic injury disaster loans to businesses and people affected by disasters. The SBA warned earlier this month that funding could run out, given the expected increase in Hurricane Helene claims, without additional funding from Congress.
There are other disaster assistance programs available, including assistance from the Federal Emergency Management Agency, or FEMA. FEMA assistance is not affected by the SBA shortfall.
Helene was a Category 4 storm that first hit Florida’s Gulf Coast on September 26, dumping trillions of gallons of rain and leaving a trail of destruction in several states for hundreds of miles. Hurricane Milton passed through Florida two weeks later.
To date, the SBA has received approximately 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 those affected by Hurricane Milton.
The SBA is pausing new loan offers until it receives more funding, meaning loans that have not yet been offered will be postponed for at least a month. However, SBA Administrator Isabel Casillas Guzman said people should continue applying for the loans.
“We know that rapid financial assistance can help communities recover quickly and stabilize local economies.” Guzman said in a statement. She added that the SBA will continue to process applications so that assistance can be disbursed quickly once funds are replenished.
The SBA said it could also make a small number of new loan offerings during this period if it receives more money from loan cancellations or similar actions.
House Speaker Mike Johnson assured there would be strong support to provide the necessary funds – when Congress returns after the November elections.
“There is no doubt that these devastating back-to-back storms have strained the SBA funding program,” Johnson, a Republican, said in a statement. “But the Biden-Harris Administration currently has the necessary disaster funding in place to meet the immediate needs of the American people in these hurricane-affected areas.”
The speaker has declined to recall lawmakers to Washington to vote on aid in the aftermath of deadly hurricanes, and has now declined to do so. He said Congress is closely monitoring this situation.
“When members return in just a few weeks, the administration should have an accurate estimate of the actual dollar amount needed and there will be strong bipartisan support to provide the necessary funding,” he said.
The SBA offers two different types of disaster loans. Business physical disaster loans are intended to repair or replace property damaged by a disaster, including real estate, inventories, supplies, machinery and equipment. Economic Injury Disaster Loans are working capital loans to assist small businesses, small agricultural cooperatives, small aquaculture businesses, and most private nonprofit organizations in meeting financial obligations that cannot be met as a direct result of a disaster.
Businesses can access loans of up to $2 million. Interest rates are as low as 4% for businesses and 3.25% for nonprofits.
The SBA also offers disaster loans of up to $500,000 to homeowners to repair or replace property damaged or destroyed by a disaster. Homeowners and renters are eligible for up to $100,000 to repair or replace personal property damaged or destroyed by a disaster.
FEMA’s disaster relief fund is a pot of money that the organization uses to respond to disasters. The money pays for things like reimbursing state and local officials for removing debris and rebuilding public infrastructure damaged by disasters. FEMA also gives disaster survivors money for things like rent while their homes are uninhabitable or for emergency needs like diapers.
FEMA Administrator Deanne Criswell has repeatedly said the disaster relief fund has enough money to respond to Helene and Milton. But Criswell has said the agency will eventually need additional funding from Congress. If that doesn’t happen, the agency would turn to what’s called “immediate needs funding.” That means the agency will stop paying out for past disasters and save its money for life-saving missions during new disasters.
For more information about all the assistance programs the government offers, visit https://www.disasterassistance.gov.
__
AP writers Lisa Mascaro and Rebecca Santana in Washington contributed to this report.
