SBA Faces Funding Shortage for Disaster Loans Amid Hurricane Helene’s Aftermath

In the wake of Hurricane Helene’s devastation, the Small Business Administration (SBA) is facing a potential funding shortfall for its disaster loan programs. As is customary following a disaster, the government is offering aid to small businesses affected by Helene. The SBA is providing disaster loans to small businesses in several counties across Florida, Georgia, North Carolina, South Carolina, Tennessee, and Virginia.

However, President Joe Biden has warned that this aid could run out “in a matter of weeks” if additional federal funding is not approved. This warning comes as another hurricane, Milton, is approaching Florida, potentially exacerbating the need for disaster relief.

In a statement, the SBA assured that it will continue to share information about its disaster loan programs and assist borrowers with the initial processing and servicing of loans. Nevertheless, if funding lapses, all new loan offers will be delayed until the program receives additional funding.

“We look forward to working with Congress to secure the federal resources necessary to ensure the SBA can continue funding affordable disaster loans for homeowners, renters, small businesses, and nonprofits,” said SBA Administrator Isabel Casillas Guzman. “Americans should not have to wait for critical assistance when they need it the most.”

Currently, business owners can apply for two types of disaster loans. Business physical disaster loans are available for repairing or replacing disaster-damaged property, including real estate, inventories, supplies, machinery, and equipment. These loans are available to businesses of any size, as well as private non-profit organizations such as charities, churches, and private universities. The deadline to apply for these loans is the end of November.

Economic injury disaster loans are working capital loans designed 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, with interest rates as low as 4 percent for businesses and 3.25 percent 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.

Business owners can apply for these loans at SBA Disaster Loan Assistance. More information can be found at SBA Disaster Assistance.

States are offering their own assistance programs too. For example, the Florida Department of Commerce is offering the Florida Small Business Emergency Bridge Loan Program, making $15 million available for businesses impacted by Hurricane Helene. Eligible small businesses may apply for loans of up to $50,000 through the program.

As the SBA navigates this challenging period, the urgency for additional federal funding becomes increasingly critical to ensure that small businesses and other affected entities receive the support they need to recover and rebuild.

Source: PBS