SBA approved $3.2 billion in disaster loans for LA wildfire survivors, but only 22% of the money has actually been disbursed

After the January 2025 LA wildfires, the Small Business Administration approved over 12,000 disaster loans totaling $3.2 billion for survivors. But as of late 2025, only 22% of that funding had actually been disbursed to survivors. The money was approved on paper but not flowing to the people who need it. Meanwhile, only about 1,200 rebuild permits had been issued across the City and County of Los Angeles, while the fires destroyed an estimated 16,000 structures. The SBA was forced to extend its application deadline specifically because California permitting delays prevented survivors from using the loans they had been approved for. The 78% disbursement gap means survivors are caught in a Catch-22. SBA loans are often the largest source of disaster recovery funding available to middle-income homeowners — larger than FEMA grants, sometimes larger than insurance payouts. But the loan proceeds are typically released in stages tied to construction progress: you get a draw when you pull a permit, another when you pour the foundation, another at framing. If you cannot get a permit — because the permitting office is overwhelmed, because debris has not been cleared from your lot, because your soil has not been tested, because you are waiting on insurance to finalize your claim — you cannot access your loan funds. You have been approved for $300,000 but you are sitting in a rental apartment burning through savings because the money is locked behind a bureaucratic gate you cannot open. This persists because SBA's disbursement process was designed for normal disasters — a tornado hits a town, 50 homes are damaged, permits are issued in weeks, rebuilding starts in months. It was not designed for catastrophic events where 16,000 structures are destroyed simultaneously, overwhelming every downstream system (debris removal, environmental testing, permitting, plan review, inspection). The SBA has no mechanism to release funds for pre-construction costs (architectural plans, engineering studies, permit fees) that survivors need to spend before construction can begin. The loan sits approved but inaccessible while survivors hemorrhage money on rent, storage, and temporary living expenses that the loan was not designed to cover.