Senate Republicans raise questions after funds for disaster loans exhausted

By Aris Folley

A group of GOP senators are pressing the Small Business Administration (SBA) for answers after officials said its disaster loan program exhausted its funds earlier this week in the aftermath of a pair of major hurricanes.

The letter, addressed to SBA Administrator Isabel Casillas Guzman, featured signatures from four Republicans on the Senate Small Business Committee: Sens. Joni Ernst (Iowa), Tim Scott (S.C.), Todd Young (Ind.) and James E. Risch (Idaho).

In the letter, the senators raised concerns about the administration’s handling of its disaster loan account and what they described as the office’s “failure to provide its authorizing committees statutorily required information.”

“These concerns are only heightened by the SBA’s lack of transparency, including the failure to provide an official Office of Management and Budget (OMB) request, and the requisite notifications and reports to authorizing committees,” they wrote. “These considerable missteps by your agency and its urgent supplemental funding request raise significant questions as to the SBA’s ability to monitor its disaster portfolio.”

The letter comes days after President Biden said the program, which he described as a “critical lifeline to small businesses, homeowners, and renters affected by disasters,” had been exhausted.

Biden administration officials have been sounding the alarm about the program’s finances in recent weeks after it became clearer its funds were in danger of running out before Congress is scheduled to return next month.

Officials said the program needs about $1.6 billion amid heightened demand following Hurricane Helene.

But senators write in their letter that, “despite several news stories, the SBA failed to follow the law and only provided the statutorily required written notification of a need for supplemental funding on October 10, 2024, days after news stories broke.”

The senators accused the SBA of failing to comply, or partially complying, with reporting requirements that exist under law to ensure Congress is provided with “sufficient notification and information before any shortfall occurs in its disaster account.”

“We must consider whether SBA’s internal decisions were the catalyst for this unfortunate situation,” they wrote in the letter.

A spokesperson for the agency said in a statement to The Hill that the agency “first raised the need for additional funds to congressional appropriators in September 2023.”

Since then, the representative said, the agency “has provided several bipartisan briefings and made many proactive requests to ensure the disaster loan program remains funded at a sufficient level.”

“While SBA’s requests were unfortunately not fulfilled, the agency continues to stand ready to work with Congress so that the tens of thousands of small business owners, homeowners, and renters devastated by Hurricanes Helene and Milton can get the funding needed to rebuild their homes and lives,” the spokesperson added.

However, the senators additionally took aim at certain administrative changes with terms of the disaster loan program that they said “lead to a substantial increase in its subsidy rate” and that the “SBA failed to properly model and did not properly notify authorizers of the ramifications of these changes,” among other concerns.