Sponsors (2)
The bill makes disaster lending easier to access—especially for small and rural businesses—by raising collateral thresholds and improving outreach, but it increases potential taxpayer and lender risk and expands SBA workloads, relying on later GAO review to judge and refine the program.
Small business owners (including those affected by smaller or localized disasters) will be able to get larger SBA disaster loans with a higher collateral threshold and simpler collateral requirements, making credit easier and faster after disasters.
Taxpayers and small businesses gain greater accountability and transparency because a GAO study will evaluate how the collateral changes affected loan performance, giving Congress evidence to adjust policy and potentially reduce defaults or improve terms.
Small businesses and residents in rural communities will get more targeted SBA outreach and mitigation actions, increasing awareness of disaster loan options and reducing access barriers in hard-to-reach areas.
Taxpayers face greater financial exposure if SBA disaster loans made with reduced collateral requirements default, increasing potential government losses.
Lenders may bear higher credit risk on SBA-guaranteed loans made with lower collateral, which could lead to tighter lending terms or higher costs for some borrowers.
Broadening eligibility from "major disaster" to any "disaster" and imposing new outreach/operational requirements could increase program use and administrative or operational costs for the SBA and state/local governments.
Based on analysis of 4 sections of legislative text.
Raises the SBA disaster-loan collateral threshold to $50,000, expands coverage from "major disaster" to "disaster," mandates a GAO loan-performance study, and requires SBA rural/urban outreach adjustments.
Introduced February 5, 2025 by Joseph Neguse · Last progress February 5, 2025
Raises the dollar threshold used in the Small Business Act for collateral consideration to $50,000 and expands the scope from "major disaster" to any declared "disaster," making more SBA disaster loans fall under the higher collateral threshold. Requires a Government Accountability Office (GAO) study of disaster loan performance for a specified period and directs the SBA to immediately tailor its disaster-loan outreach and marketing to distinguish rural and urban communities and address rural access barriers.