By Madeleine Ngo
Officials from the Small Business Administration indicated on Tuesday that the agency would soon deplete its resources for new disaster loans aimed at supporting homeowners and businesses affected by Hurricane Helene.
According to the officials, the agency has less than $100 million remaining for new disaster loans and will keep processing incoming applications, but new loans and checks can only be issued if Congress approves supplementary funding once the funds are exhausted.
This situation arises during a particularly critical period for the nation. Federal and state authorities are bracing for Hurricane Milton, projected to be the most powerful storm in the Gulf of Mexico since 2005, expected to hit Florida late Wednesday or early Thursday. Moreover, responses to the harsh effects of Hurricane Helene are still ongoing in several Southeastern states.
“Our capacity to adequately support all disaster responses will be compromised, including our efforts regarding Milton,” stated Isabel Guzman, the agency’s administrator, in an interview on Tuesday evening.
However, it remains uncertain if lawmakers will authorize additional funding before the agency’s resources are fully utilized. Congress is not scheduled to reconvene until November 12.
Guzman mentioned that funds would “certainly run out” before this date, expressing hope that legislators might return to Washington sooner to restore the agency’s disaster loan funds. Insufficient funding could “delay a family’s capacity to rebuild their home and return safely,” or hinder a business owner’s ability to “rapidly clean up” and “rehire their employees,” she stated.
“While the SBA is primarily recognized for assisting small businesses,” Guzman added, “we also play a crucial role in helping entire communities recover and ensure economic stability.”
In a letter to congressional leaders last week, President Joe Biden stressed that lawmakers “must take action to restore this funding.” Although he didn’t specify an amount required, nor did he explicitly urge members of the House and Senate to reconvene immediately, he emphasized the importance of ensuring that major disaster programs do not “exhaust their funding during the congressional break.”
As of now, congressional leaders have not requested lawmakers to return before November 12. When asked if he would summon House members back sooner to approve additional disaster relief funding, Speaker Mike Johnson remarked on Sunday that Congress would reconvene “immediately after the election.”
“In situations like these hurricanes and significant disasters, it takes time to assess the real damages, and states will require time to do just that,” Johnson commented during a Fox News interview. “We are committed to assisting the populations in these disaster-affected areas.”
He conveyed that “everything will transpire in due course, and we will accomplish that task.”
Senate Majority Leader Chuck Schumer, D-N.Y., is also awaiting evaluations from agencies on the scene, according to a spokesperson.
The SBA offers low-interest loans to homeowners, renters, business owners, and nonprofits through its disaster relief initiatives. Homeowners can access loans of up to $500,000 for repairs or replacements of damaged or destroyed properties. Additionally, homeowners and renters can qualify for loans of up to $100,000 to replace or repair personal belongings. Businesses may secure loans reaching up to $2 million.
The funding shortfall has raised concerns among some lawmakers and disaster recovery specialists.
“This is an incredibly vital recovery mechanism, and even a slight delay or backlog of applications could be quite damaging,” remarked Jeffrey Schlegelmilch, director of the National Center for Disaster Preparedness at Columbia University. “Given the magnitude of current events, we cannot afford to wait.”
On Tuesday, Rep. Jared Moskowitz, D-Fla., introduced legislation aimed at allocating billions more in funding to the SBA for relief efforts in response to Hurricanes Helene and Milton. “Congress should have taken proactive measures to fund the SBA and FEMA before embarking on a months-long recess during hurricane season,” he declared in a statement.
The SBA has sought $1.6 billion in new funding from Congress for its disaster loan program for the entire fiscal year, although Guzman indicated that the agency might require additional funds considering Hurricane Milton’s impact. In 2023, the SBA issued nearly $3 billion in loans, including over $670 million designated for businesses and more than $2.3 billion for homeowners and renters, to support recovery efforts after disasters.
Officials from the SBA noted that they had repeatedly requested replenishments from Congress throughout the past year and have been alerting about the coming shortfall for months.
In his letter, Biden acknowledged that the Federal Emergency Management Agency had sufficient funds “for the immediate emergency response phase.” Congress had recently allocated an additional $20 billion for FEMA’s disaster relief fund.
However, Biden indicated that FEMA would encounter a funding shortfall by year’s end.
“Without further funding, FEMA would have to prioritize urgent needs over long-term recovery efforts,” Biden wrote. “Congress should provide FEMA with the necessary resources to prevent this kind of unnecessary trade-off.”
The president has been urging Congress to authorize additional disaster relief funds for several months. Biden sought funding following wildfires in Hawaii and tornadoes in Mississippi, Iowa, and Oklahoma. The administration has also requested further federal assistance to help reconstruct the collapsed Francis Scott Key Bridge near Baltimore.
