January 29, 2025
Mr. Budd (for himself, Ms. Ernst, Mr. Scott of South Carolina, Mr. Tillis, Mr. Husted, Mr. Justice, Mr. Young, Mr. Risch, and Mrs. Shaheen) introduced the following bill; which was read twice and referred to the Committee on Small Business and Entrepreneurship
March 4, 2025
Reported by Ms. Ernst, with an amendment
Strike out all after the enacting clause and insert the part printed in italic
To improve accountability in the disaster loan program of the Small Business Administration, 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 Disaster Loan Accountability and Reform Act
or the DLARA
.
Sec. 2. Table of contents
The table of contents for this Act is as follows:
Sec. 3. Definitions
In this Act—
(1)
the terms Administration and Administrator mean the Small Business Administration and the Administrator thereof, respectively; and
(2)
the term appropriate committees of Congress means the Committee on Small Business and Entrepreneurship and the Committee on Appropriations of the Senate and the Committee on Small Business and the Committee on Appropriations of the House of Representatives.
Sec. 4. Monthly disaster loan reports
Section 12091(a) of the Small Business Disaster Response and Loan Improvements Act of 2008 (15 U.S.C. 636k(a)) is amended—
(1)
in paragraph (1), by striking during the applicable period for a major disaster
;
(2)
in paragraph (2)—
(A)
in subparagraph (E), by striking how long the available funding for such loans will last
and inserting the date at which available funding for such loans will reach 10 percent of the most recent appropriation and the date at which the funds will be depleted
;
(B)
in subparagraph (H), by striking and
at the end;
(C)
in subparagraph (I), by striking the period at the end and inserting ; and
; and
(D)
by adding at the end the following:
(J)
a summary detailing any changes to estimates or assumptions on obligations and expenditures, including data supporting these changes.; and
(3)
by adding at the end the following:
(3) Prohibition on official travel
If the Administrator does not submit a report required to be submitted under paragraph (1) by the required date, no funds may be obligated for official travel by the Administrator until the Administrator submits the report.
Sec. 5. Budget request relating to disaster loans
Section 1105 of title 31, United States Code, is amended—
(1)
in subsection (a), by adding at the end the following:
(39)
separate statements of—
(A)
the amount of appropriations requested for the fiscal year for which the budget is submitted for the cost of SBA disaster loans, the 10-year average of the cost of SBA disaster loans, and an explanation for any difference between the amount requested and the 10-year average cost; and
(B)
the amount of appropriations requested for the fiscal year for which the budget is submitted for the cost of COVID-EIDL loans, the 10-year average of the cost of COVID-EIDL loans, and an explanation for any difference between the amount requested and the 10-year average cost.
(40)
separate statements of—
(A)
the amount of appropriations requested for the fiscal year for which the budget is submitted for administrative costs relating to SBA disaster loans, the 10-year average of such administrative costs, and an explanation for any difference between the amount requested and the 10-year average costs; and
(B)
the amount of appropriations requested for the fiscal year for which the budget is submitted for administrative costs relating to COVID-EIDL loans, the 10-year average of such administrative costs, and an explanation for any difference between the amount requested and the 10-year average costs.; and
(2)
by adding at the end the following:
(j)
In paragraphs (39) and (40) of subsection (a)—
(1)
the term COVID-EIDL loan means a direct loan under section 7(b) of the Small Business Act (15 U.S.C. 636(b)) that was authorized under section 1110 of the CARES Act (15 U.S.C. 9009); and
(2)
the term SBA disaster loan means a direct loan authorized by section 7(b) of the Small Business Act (15 U.S.C. 636(b)), other than a loan that was authorized under section 1110 of the CARES Act (15 U.S.C. 9009).
Sec. 6. Limitations on loan forgiveness
Section 7 of the Small Business Act (15 U.S.C. 636) is amended by adding at the end the following:
(o) Limitations on loan forgiveness
(1) In general
The Administrator may not—
(A)
forgive any loan under this section unless Congress has authorized such forgiveness; or
(B)
compromise on, suspend, or end collections on a debt owed to the Administration pursuant to paragraph (2) or (3) of section 3711(a) of title 31, United States Code.
(2) Referral of debt
If the Administrator seeks to discharge a debt and the discharge of such debt is limited under paragraph (1), the Administrator shall refer such debt to the Department of the Treasury for collection action, including a final determination regarding whether to suspend, end, or continue collection of the debt.
Sec. 7. Limits on disaster loans
(a) Low funding
Section 7(b) of the Small Business Act (15 U.S.C. 636(b)) is amended—
(1)
by redesignating the second paragraph designated as paragraph (16), relating to statute of limitations, as added by the COVID–19 EIDL Fraud Statute of Limitations Act of 2022 (Public Law 117–165; 136 Stat. 1363), as paragraph (18); and
(2)
by inserting after paragraph (16), relating to disaster declarations in rural areas, as added by the Disaster Assistance for Rural Communities Act (Public Law 117–249; 136 Stat. 2350), the following:
(17) Requirements when funding is low
(A) In general
Not later than 24 hours after the unobligated balance of amounts available for the cost of direct loans authorized by this subsection is less than 10 percent of the most recent appropriation for such costs, the Administrator shall notify the Committee on Appropriations and the Committee on Small Business and Entrepreneurship of the Senate and the Committee on Appropriations and the Committee on Small Business of the House of Representatives.
(B) Limitation on obligating funds
During the period beginning on the first business day occurring on or after the date by which the Administrator is required to notify Congress under subparagraph (A) and ending on the date on which additional amounts are appropriated for such costs, the Administrator may not obligate funds for a direct loan authorized under this subsection in an amount that is more than the amount of such a loan for which collateral is required.
(b) Repeal of authority To increase amount of loans for which collateral is not required
Section 7(d)(6) of the Small Business Act is amended by striking (or such higher amount as the Administrator determines appropriate in the event of a major disaster)
.
Sec. 8. Prohibition regarding SBA rules relating to disaster loans
(a) Definitions
In this section:
(1) Cost
The term cost has the meaning given the term in section 502 of the Federal Credit Reform Act of 1990 (2 U.S.C. 661a).
(2) Rule
The term rule has the meaning given the term in section 551 of title 5, United States Code.
(b) Prohibition
Notwithstanding any other provision of law or regulation, beginning on the date of enactment of this Act, the Administrator of the Small Business Administration may not issue any rule that will result in any increased cost to the program carried out under section 7(b) of the Small Business Act (15 U.S.C. 636(b)).
Sec. 9. GAO report on disaster loan changes
(a) Definition
In this section, the term covered final rule means—
(1)
the final rule entitled Disaster Assistance Loan Program Changes to Maximum Loan Amounts and Miscellaneous Updates
(88 Fed. Reg. 39335 (June 16, 2023); RIN 3245–AH91); or
(2)
the final rule entitled Disaster Assistance Loan Program Changes to Unsecured Loan Amounts and Credit Elsewhere Criteria
(89 Fed. Reg. 59826 (July 24, 2024); RIN 3245–AI08).
(b) Report
Not later than 1 year 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 and the Committee on Appropriations of the Senate and the Committee on Small Business and the Committee on Appropriations of the House of Representatives a report on—
(1)
the cost (as defined in section 502 of the Federal Credit Reform Act of 1990 (2 U.S.C. 661a)) of the increase in the home loan lending limits for, the extension of the deferment period for, the expansion of mitigation options for, the modifications to the criteria for determining whether applicants can obtain credit elsewhere with respect to, the changes to collateral requirements for, and other changes to the terms and conditions of loans under section 7(b)(1) of the Small Business Act (15 U.S.C. 636(b)(1)) made by the covered final rules; and
(2)
the effect on the subsidy for such loans of the changes contained in the covered final rules.
Sec. 10. SBA Inspector General review
(a) Definitions
In this section—
(1)
the term covered amounts means amounts made available for the cost of direct loans authorized by section 7(b) of the Small Business Act (15 U.S.C. 636(b)); and
(2)
the term Inspector General means the Inspector General of the Administration.
(b) Review
(1) In general
The Inspector General shall conduct a review of the circumstances surrounding the funding shortfall with respect to covered amounts, as described in—
(A)
the letter from President Joseph R. Biden, Jr. entitled Letter to Congress on Disaster Needs
, dated October 4, 2024; and
(B)
the letter from the Administrator submitted to the Chair and Ranking Members of the Committees on Appropriations of the Senate and the House of Representatives, dated October 10, 2024.
(2) Contents
The review required under paragraph (1) shall include the following with respect to the funding shortfall described in that paragraph:
(A)
The identification of any reporting or notification requirements in statute that the Administration failed to provide to Congress with respect to the funding shortfall.
(B)
The reason for any obligation or expenditure of covered amounts for a purpose that significantly diverged from the purpose for which the covered amounts were made available.
(C)
An analysis of the accuracy of projections and estimates relevant to the divergences described in subparagraph (B).
(D)
The identification and description of any internal controls in place to manage covered amounts.
(E)
An analysis of the impact that any reorganization of the Administration, including the transfer of administrative authority for the program carried out under section 7(b) of the Small Business Act (15 U.S.C. 636(b)) to the Office of Capital Access of the Administration, may have had with respect to the funding shortfall.
(F)
The identification of actions that the Administration can take to—
(i)
improve the accuracy of information submitted by the President under section 1105(a) of title 31, United States Code, with respect to the Administration;
(ii)
prevent any future funding shortfall with respect to any account of the Administration; and
(iii)
improve the report submitted to the appropriate committees of Congress under section 12091(a) of the Small Business Disaster Response and Loan Improvements Act of 2008 (15 U.S.C. 636k(a)).
(G)
Any other matter determined relevant by the Inspector General.
(c) Report
Not later than 180 days after the date of enactment of this Act, the Inspector General shall submit to the appropriate committees of Congress a report that contains the findings of the review carried out under subsection (b).
Sec. 11. Budget and forecasting report regarding the cost of direct disaster loans
(a) Budget formulation and forecasting
Not later than 30 days after the date of enactment of this Act, the Administrator shall submit to the appropriate committees of Congress a report detailing corrections the Administration will make to improve forecasting, data quality, and budget assumptions relating to budget submissions relating to amounts made available for the cost of direct loans authorized by section 7(b) of the Small Business Act (15 U.S.C. 636(b)).
(b) Updates
Not later than 90 days after the date of enactment of this Act, and every 90 days thereafter until the date that is 90 days after the date on which all the corrections described in subsection (a) have been implemented, the Administrator shall submit to the appropriate committees of Congress a report—
(1)
detailing the actions the Administration has taken to implement the corrections described in subsection (a); and
(2)
explaining how each action detailed under paragraph (1) is directly related to implementing 1 or more corrections described in subsection (a).
Section 1. Short title
This Act may be cited as the Disaster Loan Accountability and Reform Act
or the DLARA
.
Sec. 2. Table of contents
The table of contents for this Act is as follows:
Sec. 3. Definitions
In this Act—
(1)
the terms Administration and Administrator mean the Small Business Administration and the Administrator thereof, respectively;
(2)
the term appropriate committees of Congress means the Committee on Small Business and Entrepreneurship and the Committee on Appropriations of the Senate and the Committee on Small Business and the Committee on Appropriations of the House of Representatives; and
(3)
the term SBA disaster loan means a direct loan authorized by section 7(b) of the Small Business Act (15 U.S.C. 636(b)), other than a loan that was authorized under section 1110 of the CARES Act (15 U.S.C. 9009).
Sec. 4. Monthly disaster loan reports
Section 12091(a) of the Small Business Disaster Response and Loan Improvements Act of 2008 (15 U.S.C. 636k(a)) is amended—
(1)
in paragraph (1)—
(A)
by striking during the applicable period for a major disaster
; and
(B)
by striking for that major disaster
;
(2)
in paragraph (2)—
(A)
in subparagraph (E), by striking how long the available funding for such loans will last
and inserting the date at which available funding for such loans will reach 10 percent of the most recent appropriation and the date at which the funds will be depleted
;
(B)
in subparagraph (H), by striking and
at the end;
(C)
in subparagraph (I), by striking the period at the end and inserting ; and
; and
(D)
by adding at the end the following:
(J)
a summary detailing any changes to estimates or assumptions on obligations and expenditures, including data supporting these changes.; and
(3)
by adding at the end the following:
(3) Prohibition on official travel
If the Administrator does not submit a report required to be submitted under paragraph (1) by the required date, no funds may be obligated for official travel by the Administrator until the Administrator submits the report.
Sec. 5. Budget request relating to disaster loans
Section 1105 of title 31, United States Code, is amended—
(1)
in subsection (a), by adding at the end the following:
(39)
separate statements of—
(A)
the amount of appropriations requested for the fiscal year for which the budget is submitted for the cost of SBA disaster loans, the 10-year average of the cost of SBA disaster loans, and an explanation for any difference between the amount requested and the 10-year average cost; and
(B)
the amount of appropriations requested for the fiscal year for which the budget is submitted for the cost of COVID-EIDL loans, the 10-year average of the cost of COVID-EIDL loans, and an explanation for any difference between the amount requested and the 10-year average cost.
(40)
separate statements of—
(A)
the amount of appropriations requested for the fiscal year for which the budget is submitted for administrative costs relating to SBA disaster loans, the 10-year average of such administrative costs, and an explanation for any difference between the amount requested and the 10-year average costs; and
(B)
the amount of appropriations requested for the fiscal year for which the budget is submitted for administrative costs relating to COVID-EIDL loans, the 10-year average of such administrative costs, and an explanation for any difference between the amount requested and the 10-year average costs.; and
(2)
by adding at the end the following:
(j)
In paragraphs (39) and (40) of subsection (a)—
(1)
the term COVID-EIDL loan means a direct loan under section 7(b) of the Small Business Act (15 U.S.C. 636(b)) that was authorized under section 1110 of the CARES Act (15 U.S.C. 9009); and
(2)
the term SBA disaster loan means a direct loan authorized by section 7(b) of the Small Business Act (15 U.S.C. 636(b)), other than a loan that was authorized under section 1110 of the CARES Act (15 U.S.C. 9009).
Sec. 6. Limitations on disaster loans
(a) Low funding
Section 7(b) of the Small Business Act (15 U.S.C. 636(b)) is amended—
(1)
by redesignating the second paragraph designated as paragraph (16), relating to statute of limitations, as added by the COVID–19 EIDL Fraud Statute of Limitations Act of 2022 (Public Law 117–165; 136 Stat. 1363), as paragraph (18); and
(2)
by inserting after paragraph (16), relating to disaster declarations in rural areas, as added by the Disaster Assistance for Rural Communities Act (Public Law 117–249; 136 Stat. 2350), the following:
(17) Requirements when funding is low
(A) In general
Not later than 24 hours after the unobligated balance of amounts available for the cost of direct loans authorized by this subsection is less than 10 percent of the 10-year average annual cost provided in the most recent Presidential budget request required under section 1105(a)(39)(A) of title 31, United States Code, or, if unavailable, the 10-year average annual cost for the immediately preceding 10-year period of SBA disaster loans (as defined in section 1105(j) of such title), the Administrator shall notify the Committee on Appropriations and the Committee on Small Business and Entrepreneurship of the Senate and the Committee on Appropriations and the Committee on Small Business of the House of Representatives.
(B) Limitation on obligating funds
During the period beginning on the first business day occurring on or after the date by which the Administrator is required to notify Congress under subparagraph (A) and ending on the date on which additional amounts are appropriated for such costs, the Administrator may limit the obligation of funds for a direct loan authorized under this subsection to the amount of such a loan for which collateral is required.
(C) Authority to limit obligation of funds
In carrying out the authority to enact a limitation under (B), the Administrator shall apply that limitation with respect to amounts obligated for all direct loans authorized under this subsection during the period described in subparagraph (B).
(D) Requirement to disburse within 14 days
If the Administrator exercises the authority under (B), the Administrator shall, not later than 14 days after the date on which additional amounts are appropriated under subparagraph (B), obligate and disburse on a regular schedule any remaining amount outstanding on a direct loan authorized under this subsection.
(b) Sunset
Effective on the date that is 4 years after the date of enactment of this Act, section 7(b) of the Small Business Act (15 U.S.C. 636(b)) is amended—
(1)
by striking paragraph (17); and
(2)
by redesignating paragraph (18) as paragraph (17).
(c) Report
Not later than 1 year after the date of enactment of this Act, in the event that the Administrator exercises the authority described in paragraph (17)(B) of section 7(b) of the Small Business Act (15 U.S.C. 636(b)), as added by subsection (a), the Comptroller General of the United States shall submit to the appropriate committees of Congress a report assessing the actual and potential impact of the amendments made by subsection (a) during the period covered by the report.
Sec. 7. GAO report on SBA disaster loan account
(a) Report
Not later than 180 days after the date of enactment of this Act, the Comptroller General of the United States shall submit to the Administrator and the appropriate committees of Congress a report on—
(1)
the average weekly rate at which the Administration obligates the unobligated balance of amounts available for the cost of SBA disaster loans;
(2)
the average amount, during the periods beginning on October 1, 2015 and ending on July 31, 2023 and beginning on July 31, 2023 and ending on the date of enactment of this Act, respectively, disbursed to a borrower each week, during the initial 12-week period in which a borrower receives amounts from an SBA disaster loan, beginning the day after the borrower accepts their loan, separated by home SBA disaster loan borrowers, business SBA disaster loan borrowers, and economic injury disaster loan borrowers; and
(3)
the average amount of fully disbursed SBA disaster loans, originated during the period beginning on July 31, 2023 and ending on the date of enactment of this Act, with separate averages for SBA disaster loans delineated by home, business, and economic injury disaster loans.
(b) Response
Not later than 90 days after the date on which the Comptroller General of the United States submits the report under subsection (a), the Administrator shall submit to the appropriate committees of Congress a response to the report, including an implementation plan for any recommendations in the report.
Sec. 8. GAO report on disaster loan changes
(a) Definition
In this section, the term covered final rule means—
(1)
the final rule entitled Disaster Assistance Loan Program Changes to Maximum Loan Amounts and Miscellaneous Updates
(88 Fed. Reg. 39335 (June 16, 2023); RIN 3245–AH91); or
(2)
the final rule entitled Disaster Assistance Loan Program Changes to Unsecured Loan Amounts and Credit Elsewhere Criteria
(89 Fed. Reg. 59826 (July 24, 2024); RIN 3245–AI08).
(b) Report
Not later than 1 year after the date of enactment of this Act, the Comptroller General of the United States shall submit to the appropriate committees of Congress a report on—
(1)
the cost (as defined in section 502 of the Federal Credit Reform Act of 1990 (2 U.S.C. 661a)) of the increase in the home loan lending limits for, the extension of the deferment period for, the expansion of mitigation options for, the modifications to the criteria for determining whether applicants can obtain credit elsewhere with respect to, the changes to collateral requirements for, and other changes to the terms and conditions of loans under section 7(b)(1) of the Small Business Act (15 U.S.C. 636(b)(1)) made by the covered final rules; and
(2)
the effect on the subsidy for such loans of the changes contained in the covered final rules.
Sec. 9. SBA Inspector General review
(a) Definitions
In this section—
(1)
the term covered amounts means amounts made available for the cost of direct loans authorized by section 7(b) of the Small Business Act (15 U.S.C. 636(b)); and
(2)
the term Inspector General means the Inspector General of the Administration.
(b) Review
(1) In general
The Inspector General shall conduct a review of the circumstances surrounding the funding shortfall with respect to covered amounts, as described in—
(A)
the letter from President Joseph R. Biden, Jr. entitled Letter to Congress on Disaster Needs
, dated October 4, 2024; and
(B)
the letter from the Administrator submitted to the Chair and Ranking Members of the Committees on Appropriations of the Senate and the House of Representatives, dated October 10, 2024.
(2) Contents
The review required under paragraph (1) shall include the following with respect to the funding shortfall described in that paragraph:
(A)
The identification of any report or notification required by statute that the Administration failed to provide to Congress with respect to the funding shortfall.
(B)
The reason for any obligation or expenditure of covered amounts for a purpose that significantly diverged from the purpose for which the covered amounts were made available.
(C)
An analysis of the accuracy of projections and estimates relevant to the divergences described in subparagraph (B).
(D)
The identification and description of any internal controls in place to manage covered amounts.
(E)
An analysis of the impact that any reorganization of the Administration, including the transfer of administrative authority for the program carried out under section 7(b) of the Small Business Act (15 U.S.C. 636(b)) to the Office of Capital Access of the Administration, may have had with respect to the funding shortfall.
(F)
The identification of actions that the Administration can take to—
(i)
improve the accuracy of information submitted by the President under section 1105(a) of title 31, United States Code, with respect to the Administration;
(ii)
prevent any future funding shortfall with respect to any account of the Administration; and
(iii)
improve the reports submitted to the appropriate committees of Congress under section 12091(a) of the Small Business Disaster Response and Loan Improvements Act of 2008 (15 U.S.C. 636k(a)).
(G)
Any other matter determined relevant by the Inspector General.
(c) Report
Not later than 180 days after the date of enactment of this Act, the Inspector General shall submit to the appropriate committees of Congress a report that contains the findings of the review carried out under subsection (b).
Sec. 10. Budget and forecasting report regarding the cost of direct disaster loans
(a) Budget formulation and forecasting
Not later than 30 days after the date of enactment of this Act, the Administrator shall submit to the appropriate committees of Congress a report detailing corrections the Administration will make to improve forecasting, data quality, and budget assumptions relating to budget submissions relating to amounts made available for the cost of SBA disaster loans.
(b) Updates
Not later than 90 days after the date of enactment of this Act, and every 90 days thereafter until the date that is 90 days after the date on which all the corrections described in subsection (a) have been implemented, the Administrator shall submit to the appropriate committees of Congress a report—
(1)
detailing the actions the Administration has taken to implement the corrections described in subsection (a); and
(2)
explaining how each action detailed under paragraph (1) is directly related to implementing 1 or more corrections described in subsection (a).