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The government loan program to help small businesses after disasters is out of money

ARI SHAPIRO, HOST:

Businesses devastated by Hurricanes Helene or Milton may have to wait for federal help rebuilding. The Small Business Administration, which runs the government's disaster loan program, says that program is out of money. NPR's Andrea Hsu reports.

ANDREA HSU, BYLINE: Caitlyn Patch just opened her dream business in April, a hair salon called Rustic Ritual Beauty, in Asheville, North Carolina. She had two employees and was onboarding another four. Business had picked up, and her finances were looking good.

CAITLYN PATCH: So I was really going in a really good upward direction.

HSU: But then came Helene. Water came rushing in, rising all the way to the ceiling.

PATCH: My sofa was thrown from the front room to the back room, and my shampoo chairs were ripped out of place.

HSU: The six salon stations, the hot water heater, the washer, dryer - all of it was pushed to the back of the salon and destroyed.

PATCH: I've invested everything I have, and I'm a single mom of twins, so, like, this is a big deal.

HSU: Patch has some flood insurance but not nearly enough to cover her damages. On October 1, she applied for a low-interest loan through the Small Business Administration. The status remains under review, and now that program is out of money. President Biden has urged people to keep applying, noting that loans will be available after Congress returns in mid November.

On CBS's "Face The Nation," House Speaker Mike Johnson was asked why Congress couldn't return earlier. His response - states need time to figure out what they need.

(SOUNDBITE OF SHOW, "FACE THE NATION")

MIKE JOHNSON: Congress will meet, and in bipartisan fashion, we will address those needs. We'll provide the additional resources, but it would be premature to call everyone back now.

HSU: The thing about SBA loans is that after disasters, they usually offer swift relief. Benjamin Collier at Temple University School of Business says, government money is often available well before private lenders, who are more cautious, are willing to step in.

BENJAMIN COLLIER: The SBA is addressing what seems like a gap. What we found was that these disaster loans greatly reduce the likelihood that a firm closes permanently.

HSU: The loans help businesses make repairs, which in turn benefits the communities that rely on those businesses for employment, for goods and services and also for tax revenue. Funding for the SBA's disaster loan program hasn't generally been a problem, Collier says. In fact...

COLLIER: Historically, this program has received more funding than there's been takeout.

HSU: But here's the challenge. In the 1980s, there were on average three natural disasters a year, causing more than $1 billion in damages. Now it's more than 20 a year, according to NOAA, the federal agency that monitors weather and storms.

COLLIER: Big disasters are becoming much, much more frequent.

HSU: Back in Asheville, while Caitlyn Patch waits to hear from the SBA, she's applied for other funds through local nonprofits. And then there's the generosity of others. A stylist in Asheville started a GoFundMe that's so far raised more than $40,000 for eight local salons devastated by the storm.

Andrea Hsu, NPR News.

(SOUNDBITE OF MUSIC) Transcript provided by NPR, Copyright NPR.

NPR transcripts are created on a rush deadline by an NPR contractor. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative record of NPR’s programming is the audio record.

Andrea Hsu is NPR's labor and workplace correspondent.