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The Small Business Administration (SBA) has run out of money for its disaster loan program after an overwhelming demand in the wake of hurricanes Helene and Milton. Announced on Tuesday, the SBA confirmed that it had "exhausted funds" for its critical disaster loan services, which provide essential financial relief to small businesses, homeowners, and renters impacted by natural disasters.

 

President Joe Biden emphasized the importance of the program in a statement shared with several outlets, saying, "This program is a critical lifeline to small businesses, homeowners, and renters affected by disasters." However, the SBA has had to "pause new loan offers for its direct, low-interest, long-term loans to disaster survivors" until Congress approves additional funding.

 

Biden sought to reassure disaster survivors, stating that House Speaker Mike Johnson had pledged to replenish the disaster loan program when Congress reconvenes. "Americans should continue to apply for these loans," Biden said, adding that the SBA will keep processing applications and disbursing loans once the necessary funds are secured from Congress. 

Earlier this month, Biden had warned congressional leaders that the program would run out of money "well before"

 

Congress was set to return. The warning came as the demand for assistance surged after the recent hurricanes. Despite this, Speaker Johnson appeared unconcerned, telling CBS News that the issue "can wait" because Congress had already approved $20 billion in additional funds for FEMA as part of a stopgap government funding bill. This funding, Johnson argued, would allow FEMA to "address immediate needs" in disaster areas while Congress worked on a more permanent solution for the SBA loan program.

 

The $20 billion was allocated as part of a government spending measure that extended federal funding until December, at which time Congress is expected to review the SBA disaster loan program’s finances and potentially approve further funding.

 

For now, the SBA’s disaster centers and in-person teams remain deployed across the country. Despite the funding pause, the agency is encouraging disaster survivors not to wait to begin the loan application process. "Disaster survivors in need of an SBA loan for personal belongings, residential property damage, and business damage and disruption should not wait to apply," the SBA said. "Our disaster teams can take them through the application process and position eligible applicants to receive offers and funds as soon as Congress appropriates additional resources."

 

The SBA's disaster loan program provides a vital source of financial relief for individuals and businesses facing devastating losses after hurricanes, floods, and other natural disasters. As funds have been exhausted, affected communities are left in limbo until Congress takes action to replenish the program. President Biden has reiterated his administration’s commitment to continuing support for disaster survivors and urged lawmakers to act swiftly upon their return.

 

Representatives for Speaker Johnson did not immediately respond to requests for comment, leaving it unclear when the issue will be addressed in Congress. For now, thousands of disaster survivors wait for further clarity as the need for financial relief continues to grow.

 

Based on a report from AXIOS 2024-10-17