Key disaster loan program 'quickly exhausting' funds after hurricanes

Officials are warning a key federal program that provides disaster loans to businesses and homeowners is running critically low on funds in the aftermath of back-to-back hurricanes, increasing the pressure on Congress to return to Washington.

The Small Business Administration (SBA) has roughly $50 million left for new disaster loans, and the agency says it expects funds to be depleted soon, potentially before Congress returns from recess next month, amid heightened demand in the aftermath of Hurricane Helene. Officials say the program needs about $1.6 billion.

“SBA staff is currently on the ground across the country working to support communities impacted by disasters,” SBA Administrator Isabel Casillas Guzman said in a statement this week. But, she added, the agency is “quickly exhausting current federal funding to make new offers for affordable recovery loans to homeowners, renters, small businesses, and non-profits.”

“Americans should not have to wait for critical assistance when they need it the most.” 

President Biden has also sounded the alarm on the matter, telling reporters Thursday that Congress “should be coming back and moving on emergency needs immediately.”

“Congress should move as rapidly as they can, particularly on the most immediate need, which is small business,” he said. 

The latest call by Biden adds to the growing pressure Congress has faced to return from the campaign trail to approve additional disaster relief in response to the damage wrought by hurricanes Helene and Milton. 

Congress last month passed a temporary stopgap measure to keep federal funding from lapsing in October and to prevent a government shutdown. The bill did not include additional funding for the SBA, despite repeated requests from the administration. 

Also notably missing from the same measure was further funding for the Federal Emergency Management Agency (FEMA). Instead, negotiators said the deal allowed for the agency to use the fund’s fiscal 2025 resources faster for disaster response for the duration of the nearly three-month stopgap, allowing FEMA access to draw from a roughly $20 billion pot starting Oct. 1.

While FEMA officials have said in recent days that it has sufficient resources to respond to hurricanes Milton and Helene while Congress is out of session in the short term, they also indicated to reporters that almost half of that money is already gone. 

The SBA has said it will continue to process disaster loan applications after the funds are expended, but additional funding from Congress will be needed to make further loan offers to borrowers and send out checks. 

Lawmakers on both sides of the aisle are pushing for Congress to cut its recess early ahead of its current Nov. 12 return date, as campaigns kick it into their final gear ahead of the critical fall elections. 

In a letter to House Speaker Mike Johnson (R-La.) earlier this week, a group of House Democrats said the disaster funding approved by Congress recently fell “critically short” of what will be needed for the current fiscal year. 

“The Federal Emergency Management Agency (FEMA) must be equipped not only to respond to current disasters but also to adequately prepare for future events,” the letter read.

The lawmakers also pressed for the SBA’s disaster relief loan program to “be replenished as soon as possible to help business owners rebuild their enterprises and communities.”

Johnson signaled after Helene that he had little interest in bringing lawmakers back to Washington, saying FEMA has enough funding to cover the period until Congress is back in session. The Hill has reached out to the Speaker’s office for comment.

Even some Republicans are pushing the Speaker on the issue.

“Just got off the phone with @POTUS Biden. He is personally overseeing that FEMA does not create problems with the debris removal and is supportive of the 15 Billion in FEMA funds ONLY FOR Hurricane victims,” Rep. Anna Paulina Luna (R-Fla.) wrote Thursday on social platform X.

“If Congress goes into a special session we can get it passed immediately. This needs to happen. @SpeakerJohnson call us back,” she said Thursday before adding in a subsequent post that she also talked to Johnson and that he “is actively also working this issue.”

Pressed on the call by Biden for an early return, Senate Majority Leader Chuck Schumer’s (D-N.Y.) office also said Friday that he is “awaiting estimates from agencies working diligently on the ground.”

Despite previous requests to bolster disaster aid funds, the Biden administration has not yet released a new emergency supplemental funding request in the aftermath of Helene and Milton.

Asked earlier this week about how much time Congress has before the SBA or FEMA runs out of money, Biden told reporters that discussion on the matter is still ongoing, but he said that, “in terms of the SBA, it's pretty right at the edge right now.”

“It's going to take several billion dollars,” Biden said, discussing overall emergency needs. “It's not going to be a matter of just a little bit. But we're providing now to make sure people have the emergency relief they need.”