Bill Summary
The "Small Business Disaster Damage Fairness Act of 2025" aims to amend the Small Business Act to enhance support for small businesses affected by disasters. Key provisions include:
1. **Increased Collateral Threshold**: The legislation raises the minimum disaster loan amount that requires collateral from $14,000 to $50,000, and broadens the scope from "major disasters" to all "disasters." This change is intended to provide greater access to financial assistance for small businesses in distress.
2. **Performance Reporting**: The Act mandates a report from the Comptroller General within three years after enactment, assessing the performance and default rates of disaster loans, especially in light of the new collateral requirements. This will help evaluate the effectiveness of the changes made by the Act.
3. **Targeted Outreach for Rural Communities**: The Act requires the Small Business Administration (SBA) to differentiate its outreach efforts between rural and urban areas. The SBA is tasked with implementing strategies to address the unique challenges that rural communities face in accessing disaster loans, based on recommendations from a prior Government Accountability Office report.
Overall, the bill seeks to improve disaster loan accessibility and support for small businesses, particularly in underserved rural areas.
Possible Impacts
Here are three examples of how the "Small Business Disaster Damage Fairness Act of 2025" could affect people:
1. **Increased Access to Loans for Small Businesses**:
With the amendment to raise the minimum disaster loan amount from $14,000 to $50,000, small business owners affected by disasters may have access to significantly larger loans. This change can help businesses recover more effectively by providing them with the necessary funds to rebuild, restock inventory, or cover operational costs during the recovery period. As a result, small business owners may experience a faster return to normalcy and economic stability.
2. **Heightened Collateral Requirements**:
The increase in the minimum collateral requirement for disaster loans could make it more challenging for some small businesses to secure loans. Those who may not have sufficient assets to meet the new collateral threshold could be disqualified from obtaining necessary financial assistance. This could disproportionately impact businesses that are already struggling or those that may have limited resources, potentially leading to business closures or prolonged recovery times.
3. **Targeted Outreach for Rural Communities**:
The requirement for the Small Business Administration (SBA) to distinguish between rural and urban communities in its outreach efforts means that rural small businesses may benefit from more tailored information and assistance related to disaster loans. This could help mitigate barriers that rural businesses face in accessing financial resources, resulting in improved awareness of available programs and increased participation in disaster recovery efforts. Ultimately, this targeted assistance may lead to stronger economic resilience in rural areas after disasters.
[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[S. 397 Introduced in Senate (IS)]
<DOC>
119th CONGRESS
1st Session
S. 397
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 SENATE OF THE UNITED STATES
February 4, 2025
Mr. Kennedy (for himself, Mr. Booker, and Ms. Hirono) introduced the
following bill; which was read twice and referred to the Committee on
Small Business and Entrepreneurship
_______________________________________________________________________
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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