Small business disaster loan program runs out of money

NEW YORK — The Small Business Administration has run out of money for the disaster assistance loans it offers small businesses, homeowners and renters, delaying much needed relief for people applying for aid in the wake of the destruction caused by Hurricanes Helene and Milton.

The SBA offers Economic Injury Disaster Loans to businesses and people affected by disasters. The organization warned earlier this month that it could run out of funding given the anticipated surge in claims from Hurricane Helene.

So far, the SBA has received around 37,000 applications for relief from those impacted by Hurricane Helene and made more than 700 loan offers totaling about $48 million. It has received 12,000 applications from those impacted by Hurricane Milton. The program needs Congress to approve additional funds, but Congress doesn’t reconvene until Nov. 12.

Other government aid programs, such as those offered by the Federal Emergency Management Agency, aren’t affected by the shortfall.

Helene was a Category 4 storm that first struck Florida’s Gulf Coast on September 26, dumped trillions of gallons of rain and left a trail of destruction for hundreds of miles across several states. Hurricane Milton swept across Florida two weeks later.

The SBA is pausing new loan offers until it gets more funding, which means loans that have not already been offered will be delayed by at least a month. SBA Administrator Isabel Casillas Guzman said people should keep applying for the loans, however.

“We know that swift financial relief can help communities recover quickly to stabilize local economies.” said SBA Administrator Isabel Casillas Guzman in a statement. She added that the SBA will continue to process applications so assistance can be quickly disbursed once funds are replenished.

So far, the SBA has seen around 37,000 applications for relief submitted from those impacted by Hurricane Helene and So far, the SBA has made more than 700 Helene loan offers totaling about $48 million.

The SBA said it could also be able to make a small number of new loan offers during this time, if it gets more funds from loan cancellations or similar actions.

The SBA offers two different types of disaster loans. Business physical disaster loans are for repairing or replacing disaster-damaged property, including real estate, inventories, supplies, machinery and equipment. Economic injury disaster loans are working capital loans to help small businesses, small agricultural cooperatives, small businesses engaged in aquaculture, and most private, non-profit organizations meet financial obligations that cannot be met as a direct result of a disaster.

Businesses can access loans up to $2 million. Interest rates are as low as 4% for businesses and 3.25% for nonprofit organizations.

The SBA also offers disaster loans up to $500,000 to homeowners to repair or replace disaster-damaged or destroyed real estate. Homeowners and renters are eligible for up to $100,000 to repair or replace disaster-damaged or destroyed personal property.

The SBA loan program is separate from the disaster relief fund, which is a pot of money that is allocated to the Federal Emergency Management Agency to respond to disasters. FEMA uses that money to pay for things like refunding state and local officials for debris removal, rebuilding public infrastructure damaged by disasters, giving disaster survivors money for things like rent while their homes are uninhabitable or money for emergency needs like diapers.

FEMA Administrator Deanne Criswell has repeatedly said that the disaster relief fund has enough money to respond to Helene and Milton. But Criswell has said that the agency eventually will need supplemental funding from Congress. If that doesn’t happen, the agency would go into what’s called “immediate needs funding.” That means the agency stops paying out for previous disasters and conserves its money for life-saving missions during any new ones.

For more details about all aid programs the government offers visit https://www.disasterassistance.gov.

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AP Writer Rebecca Santana in Washington contributed to this report.