Bill Summary
The "Small Business Disaster Damage Fairness Act of 2025" aims to amend the Small Business Act by increasing the minimum disaster loan amount that requires collateral from $14,000 to $50,000, and broadening the definition of "disaster" to include a wider range of events beyond just "major disasters." The legislation also mandates a report from the Comptroller General on the performance and default rates of these loans over a specified period, assessing how the changes in collateral requirements impact loan performance.
Additionally, the Act emphasizes the need for the Small Business Administration (SBA) to distinguish between rural and urban communities in its outreach efforts regarding disaster loans. It requires the SBA to address specific challenges faced by rural areas in accessing these loans, following recommendations from a previous Government Accountability Office report. Overall, the Act seeks to enhance access to disaster assistance for small businesses, particularly in underserved rural areas.
Possible Impacts
The "Small Business Disaster Damage Fairness Act of 2025" could affect people in the following ways:
1. **Increased Loan Accessibility for Small Businesses**: By raising the minimum disaster loan amount from $14,000 to $50,000, small business owners facing disasters may have greater access to necessary funds. This could help them recover more effectively from disasters, enabling them to pay for repairs, inventory restocking, and other critical expenses that arise after a disaster.
2. **Impact on Loan Default Rates**: The requirement for a report on loan performance, including default rates, will provide insights into how the changes to collateral requirements affect small business borrowers. If the amendments lead to higher default rates, this could indicate that the new collateral requirements are too burdensome for some businesses, potentially informing future policy adjustments and support strategies.
3. **Targeted Outreach to Rural Communities**: The emphasis on distinguishing between rural and urban communities in the marketing and outreach for disaster loans could lead to improved access for rural small businesses that may face unique challenges in obtaining financial assistance. This could enhance awareness of available resources and ensure that rural entrepreneurs receive the support they need to recover from disasters, potentially leading to more equitable outcomes across different geographic areas.
[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[H.R. 1021 Introduced in House (IH)]
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119th CONGRESS
1st Session
H. R. 1021
To amend the Small Business Act to increase the minimum disaster loan
amount for which the Small Business Administration may require
collateral, and for other purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
February 5, 2025
Mr. Neguse (for himself and Mr. Obernolte) introduced the following
bill; which was referred to the Committee on Small Business
_______________________________________________________________________
A BILL
To amend the Small Business Act to increase the minimum disaster loan
amount for which the Small Business Administration may require
collateral, and for other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Small Business Disaster Damage
Fairness Act of 2025''.
SEC. 2. COLLATERAL REQUIREMENTS FOR DISASTER LOANS.
Section 7(d)(6) of the Small Business Act (15 U.S.C. 636(d)(6)) is
amended, in the second sentence, in the third proviso--
(1) by striking ``$14,000'' and inserting ``$50,000''; and
(2) by striking ``major disaster'' and inserting
``disaster''.
SEC. 3. GAO REPORT ON DEFAULT RATES.
Not later than 3 years after the date of enactment of this Act, the
Comptroller General of the United States shall submit to the Committee
on Small Business and Entrepreneurship of the Senate and the Committee
on Small Business of the House of Representatives a report on the
performance, including the default rate, of loans made under section
7(b)(1) of the Small Business Act (15 U.S.C. 636(b)(1)), and the impact
of the amendments to collateral amounts made under section 2 of this
Act on the performance of those loans, during the period--
(1) beginning on September 30, 2020; and
(2) ending on the date on that is 2 years after the date of
enactment of this Act.
SEC. 4. DISTINGUISHING BETWEEN RURAL AND URBAN COMMUNITIES IN MARKETING
AND OUTREACH.
(a) Definitions.--In this section:
(1) Administration.--The term ``Administration'' means the
Small Business Administration.
(2) Administrator.--The term ``Administrator'' means the
Administrator of the Administration.
(3) Associate administrator.--The term ``Associate
Administrator'' means the Associate Administrator of the Office
of Disaster Recovery and Resilience of the Administration.
(4) Covered program.--The term ``covered program'' means
the disaster loan program authorized by section 7(b) of the
Small Business Act (15 U.S.C. 636(b)).
(b) Requirement.--Beginning on the date of enactment of this Act,
consistent with the recommendations of the Government Accountability
Office in the report entitled ``Small Business Administration: Targeted
Outreach about Disaster Assistance Could Benefit Rural Communities''
(GAO-24-106755) (February 22, 2024), the Administrator shall ensure
that the Associate Administrator--
(1) distinguishes between rural and urban communities in
the outreach and marketing plan of the Administration with
respect to the covered program; and
(2) incorporates actions to mitigate challenges encountered
by rural communities in accessing loans under the covered
program.
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