In the aftermath of Hurricanes Helene and Milton, the Small Business Administration’s (SBA) disaster loan program has run out of money, leaving thousands of small businesses, homeowners, and renters without crucial financial relief. The SBA’s Economic Injury Disaster Loans (EIDL), which are typically available to those affected by natural disasters, have been paused until Congress approves additional funding.
The funding shortfall comes at a critical time. After Hurricane Helene ravaged the Gulf Coast in late September, followed by Hurricane Milton in early October, the demand for disaster relief surged dramatically. Despite receiving around 37,000 applications for assistance after Helene, the SBA could only issue about 700 loan offers, totaling $48 million. Since then, the SBA has received another 12,000 applications from those affected by Milton.
Funding Crisis Leaves Many Waiting for Relief
The SBA had warned earlier this month that its disaster loan program might run out of money, given the scale of the damage caused by Helene. Congress has yet to approve new funds, delaying the much-needed relief for applicants. While the SBA remains a crucial source of financial support during recovery, the current halt has left small businesses in limbo.
Despite this setback, other forms of assistance are still available. The Federal Emergency Management Agency (FEMA), which provides grants and temporary housing assistance, is not impacted by the SBA’s funding shortfall. However, SBA loans typically offer more long-term financial support for rebuilding efforts.
Urgency Grows for Congressional Action
Both Hurricanes Helene and Milton left a path of devastation across Florida and neighboring states. Helene, a Category 4 storm, flooded communities, destroyed infrastructure, and displaced thousands of people. Milton’s arrival compounded the recovery challenges, hitting many of the same areas already grappling with Helene’s aftermath.
For many small businesses, disaster loans are a vital lifeline for recovery. Without access to this funding, businesses are unable to rebuild, reopen, or cover ongoing expenses. Advocacy groups are urging Congress to act quickly to allocate new funds to the SBA to ensure businesses can begin the recovery process.
Until Congress moves to replenish the SBA’s disaster loan funds, thousands of applications will remain in limbo, leaving storm-ravaged communities across the Gulf Coast struggling to recover.
Insurance Industry Implications
- Business Interruption Insurance: With the SBA’s disaster loan program depleted, many small businesses may turn to their insurance policies for support. Business Interruption Insurance, in particular, will be critical for companies needing to cover operational expenses and lost income while rebuilding after hurricanes.
- Supplementary Insurance Products: The funding shortfall highlights a potential gap in financial recovery options for businesses after natural disasters. Insurers can address this gap by offering specialized products that complement government aid.
- Quick Claims Processing and Support: With SBA funding on hold, insurance companies will likely face additional pressure to expedite claims processing. When public assistance becomes delayed, the spotlight often falls on private insurers to fill the gap.