To amend the Small Business Act to waive the accrual of interest and payments for certain disaster loans for a year, and for other purposes.

Bill Number

H.R. 3557

Origin Chamber

House

Congress

119th Congress, Session 1

Policy Area

Commerce

Status

Introduced

Latest Action

2025-05-21: Referred to the House Committee on Small Business.

Last Updated

2026-05-01T21:41:23Z

AI-Generated Summary

Purpose

This bill, H.R. 3557, aims to provide financial relief to small businesses recovering from disasters by temporarily eliminating interest charges and payment requirements on certain federal disaster loans. It seeks to ease the initial financial burden on affected businesses, allowing them to focus on rebuilding without immediate repayment pressures.

Key Provisions

• Applies to loans made under Section 7(b) of the Small Business Act, which provides disaster assistance to businesses harmed by events like natural disasters declared by the federal government.
• For disasters declared on or after the bill's enactment date:
• Sets the interest rate at 0% for the first 12 months starting from the date the loan is disbursed (when funds are released to the borrower).
• Defers (postpones) all principal payments during this same 12-month period.
• These changes are directed to the Administrator of the Small Business Administration (SBA), the federal agency that manages these loans.

Significant Changes to Existing Law

• Amends Section 7(d) of the Small Business Act (15 U.S.C. 636(d)) by adding a new paragraph (9), which introduces the interest waiver and payment deferral for qualifying disaster loans.
• Previously, disaster loans under Section 7(b) typically accrued interest from the disbursement date and required payments to begin after a short deferral period (often 12 months but with interest accumulating). This bill eliminates interest entirely for the first year and extends full payment deferral, representing a more generous relief structure than current law.

Potential Impacts

• On small businesses: Reduces early financial strain, potentially improving recovery rates for disaster-affected owners by freeing up cash for operations and repairs.
• On government agencies: The SBA would forgo interest revenue on these loans for the first year, which could increase administrative costs for tracking deferred payments but streamline loan processing.
• On citizens: Indirectly benefits communities hit by disasters, as healthier small businesses support local jobs and economies.
• No direct impact on international relations, as this is a domestic small business relief measure.

Main Stakeholders

• Small business owners: Primary beneficiaries, especially those in disaster-prone areas like regions affected by hurricanes, floods, or wildfires.
• Small Business Administration (SBA): Responsible for implementing the changes, including loan disbursement and compliance.
• Federal government and taxpayers: Bear the cost of waived interest, potentially affecting the federal budget for disaster aid programs.
• Local communities and economies: Gain from faster business recovery, which sustains employment and services.

Notable Legal, Constitutional, or Political Implications

• Legal: Strengthens the SBA's authority to offer flexible disaster relief without needing case-by-case approvals, aligning with the Small Business Act's goal of promoting economic recovery. No conflicts with existing loan repayment frameworks, as it builds on them.
• Constitutional: No apparent issues, as it falls under Congress's spending power (Article I, Section 8) to regulate commerce and provide for the general welfare through targeted aid.
• Political: Could appeal across party lines by supporting bipartisan disaster response, but may spark debate over the fiscal cost of interest waivers amid budget constraints. As an introduced bill (not yet passed), its fate depends on committee review and potential amendments in the 119th Congress.

This summary was generated by AI and may contain inaccuracies. Refer to the official source document for the authoritative text.

Sponsor

Rep. Neguse, Joe [D-CO-2]

Cosponsors (2)

Rep. Ciscomani, Juan [R-AZ-6], Rep. Nunn, Zachary [R-IA-3]

Recent Actions

• 2025-05-21: Referred to the House Committee on Small Business.
• 2025-05-21: Introduced in House
• 2025-05-21: Introduced in House

Bill Versions

• To amend the Small Business Act to waive the accrual of interest and payments for certain disaster loans for a year, and for other purposes. — issued 2025-05-21 — PDF (2 pages)