A blame game is underway between the Biden administration and Republican lawmakers after funds from a key disaster loan program ran out in the middle of a destructive hurricane season.
The Biden administration said the Small Business Administration (SBA) needs $2 billion in funding after its disaster loan account — which businesses and homeowners rely on for low-interest loans to recover from disasters — was depleted following Hurricanes Helene and Milton.
But Republicans are tightening scrutiny over the agency’s handling of disaster funds and pushing for more information about the circumstances surrounding the funding shortfall.
“The agency’s refusal to be transparent made it clear when the SBA would run out of money and how it spent the billions in existing disaster funding,” Sen. Joni Ernst (Iowa), top Republican on the Senate Small Business Committee, said on Monday in a statement to The Hill.
“Innocent disaster victims should not be left out in the cold because of bureaucratic blunders.”
The SBA has firmly rejected the Republican Party’s criticism, saying it has been “very vocal and transparent” about the level of funding for its loan program while also acknowledging “inaction” from Congress.
In a letter obtained by The Hill, the SBA told Ernst last week that the agency has been raising the need for additional funding with spending negotiators since last year.
Citing previous work with the Office of Management and Budget to request additional funding, the agency said it “began regularly notifying budget committees in August 2024 of dwindling balances in the SBA’s disaster grant loan account.”
“As required by law, since 2008, the SBA has provided Congress with detailed monthly performance reports containing total available grant balances, as well as data on loan applications, disbursements, activities, disaster declarations, and related activities,” the office said.
“Several members of your committee have received these reports. The SBA also publishes these monthly disaster loan reports online,” it continued. “Despite Congressional inaction, SBA disaster relief staff are funded and continue to support survivors and process applications.”
It also pointed to the lack of emergency spending in the emergency government funding bill that Congress passed in September to avert a shutdown before leaving town on a break in October as the 2024 campaign season got into full swing.
The letter comes weeks after Ernst and other Republicans on the Small Business Committee sent their own letter to SBA Administrator Isabel Casillas Guzman requesting reporting on the disaster loan program’s spending rate, disaster staffing levels, documentation and communications Push with financing requests and other information.
At the time, the group of Republican lawmakers — which also included Sens. Tim Scott (S.C.), Todd Young (Ind.) and James Risch (Idaho) — also expressed concern about what they called the “failure” of the office. to provide its approval committees with the information required by law.”
“We must consider whether the SBA’s internal decisions were the catalyst for this unfortunate situation,” they wrote at the time, while accusing the agency of failing or only “partially” complying with reporting requirements to ensure that Congress “sufficient “Informed” information before a deficit occurs in its disaster account.”
Scott and Ernst, along with Sen. Thom Tillis (R-N.C.), have also since introduced bipartisan legislation that includes: Emergency funding for the SBA and measures requiring a review of the causes that led to the deficit and the identification of administrative measures that can be taken to prevent “any future funding gap.”
The move is just one of the latest cases this year in which an agency has faced criticism from lawmakers over a request for emergency funding.
The Department of Veterans Affairs (VA) warned earlier this year that without congressional action, veterans’ benefit payments may be paused due to a roughly $3 billion budget deficit in October.
Lawmakers were able to avert the threat of a benefits cliff after passing bipartisan legislation to close the deficit — but not without measures that required the VA secretary to submit reports to lawmakers detailing ways to improve forecasts and budget assumptions become.
Members on both sides of the aisle, representing states hardest hit by the storms, are increasing pressure to provide disaster relief. But some GOP negotiators did pointed to possible hurdles on requests for funds for programs like the Education Department and the Environmental Protection Agency more broadly under the Biden administration $100 billion is needed for disaster funds.
“It has to be a very robust package. We understand that. We agree with that,” House Budget Committee Chairman Tom Cole (R-Okla.) told reporters last week.
“There is some disagreement at this point in terms of some programmatic reasons… the government adds, and there are some things that we think they have left out that they should take into account,” he said.
Meanwhile, Tillis said at a Senate Budget Committee hearing last week that he “fully” supports the administration’s request for $100 billion. But he also added: “This is just the beginning.”
“We have to react to storms differently. This may be the first time, but it will not be the last as we have seen in North Carolina, and we owe it to the American people to be prepared to do better,” Tillis said.
President Biden said the SBA’s disaster loan program ran out of funds in mid-October. The agency said it would not be able to issue up-to-date loans without additional funding from Congress, but officials said it continued to process loan applications.
Reached for comment Monday following recent criticism of the Republican Party, SBA cited Guzman’s testimony last week to Senate Appropriators about what the agency described as “a growing backlog of more than $1 billion in loan offerings for survivors.” “The agency stands ready to pay out as soon as Congress appropriates additional funding.”
“The SBA knows that disaster survivors urgently need these funds and stands ready to provide them as soon as Congress acts.”
Guzman told Senate appropriators that the SBA approved “over 27,000 disaster loans totaling $1.7 billion and 160 disaster declarations” across the country and territories in fiscal year 2024.
“The SBA is currently supporting more than 400 disaster declarations across the country and managing a portfolio of 2.5 million loans valued at $285 billion,” she said at the hearing, also pointing out that “more than 12,500 disaster victims already stand in the queue.” .”
