DLARA
- Bill Number
- S. 300
- Origin Chamber
- Senate
- Congress
- 119th Congress, Session 1
- Policy Area
- Commerce
- Status
- Introduced
- Latest Action
- 2025-03-04: Placed on Senate Legislative Calendar under General Orders. Calendar No. 22.
- Last Updated
- 2026-06-17T14:46:19Z
AI-Generated Summary
Purpose
The Disaster Loan Accountability and Reform Act (DLARA), S. 300, aims to enhance transparency, oversight, and fiscal responsibility in the Small Business Administration's (SBA) disaster loan program. This program provides direct loans to businesses, homeowners, and nonprofits affected by disasters (excluding COVID-19 Economic Injury Disaster Loans, or COVID-EIDL). The bill addresses recent funding shortfalls by requiring better reporting, budgeting, and controls to prevent mismanagement and ensure funds are used appropriately.
Key Provisions
- Monthly Disaster Loan Reports (Sec. 4): Amends existing law to require the SBA Administrator to submit ongoing monthly reports on loan program status, including projections on when funding will drop to 10% of recent appropriations or be fully depleted, and summaries of changes to spending estimates. Adds a penalty: if reports are late, the Administrator cannot use funds for official travel until submitted.
- Budget Requests for Disaster Loans (Sec. 5): Requires the President's annual budget submission to include detailed statements on requested appropriations for SBA disaster loan costs and administrative expenses, compared to 10-year averages, with explanations for differences. Separates regular SBA disaster loans from COVID-EIDL loans.
- Limitations on Disaster Loans During Low Funding (Sec. 6): When unobligated funds fall below 10% of the 10-year average annual cost (based on budget data), the SBA must notify Congress within 24 hours. During the shortfall period (until new funds are appropriated), the SBA can limit new loan obligations to amounts that require collateral (assets pledged as security), applying this uniformly to all loans. Once funds are replenished, any withheld amounts must be disbursed within 14 days. This provision sunsets (expires) after 4 years. If used, the Government Accountability Office (GAO) must report on its impacts within 1 year.
- GAO Report on SBA Disaster Loan Account (Sec. 7): Requires a GAO report within 180 days analyzing loan obligation rates, average weekly disbursements to borrowers (separated by home, business, and economic injury loans over specific periods), and average fully disbursed loan amounts since July 2023. The SBA must respond with an implementation plan for recommendations within 90 days.
- GAO Report on Recent Disaster Loan Rule Changes (Sec. 8): Mandates a GAO report within 1 year assessing the financial costs (using federal credit reform definitions, which estimate long-term government expenses) and subsidy effects (reductions in expected loan recoveries) of two specific SBA rules from 2023 and 2024 that expanded loan limits, deferment periods, mitigation options, credit access criteria, and collateral rules.
- SBA Inspector General Review (Sec. 9): Directs the SBA's Inspector General (an independent watchdog) to review the 2024 funding shortfall cited in presidential and SBA letters. The review covers missed notifications, spending divergences, projection accuracy, internal controls, impacts of SBA reorganizations (e.g., shifting program authority), and recommendations to improve budget accuracy, prevent shortfalls, and enhance reports. A report to Congress is due within 180 days.
- Budget and Forecasting Improvements (Sec. 10): Requires the SBA to submit an initial report within 30 days detailing planned fixes for forecasting, data quality, and budget assumptions related to disaster loan costs. Follow-up reports every 90 days track implementation until all fixes are complete.
Significant Changes to Existing Law
- Enhanced Reporting and Penalties: Builds on the 2008 Small Business Disaster Response and Loan Improvements Act by expanding monthly reports to be ongoing (not just during major disasters), adding funding depletion projections and estimate change summaries, and introducing travel fund restrictions for noncompliance.
- Budget Transparency: Amends federal budget laws (31 U.S.C. § 1105) to mandate specific, separated disclosures for disaster loan costs and admin expenses, including 10-year averages—previously, these were not required in such detail.
- Funding Safeguards: Introduces temporary loan obligation limits tied to collateral during shortfalls, repeals prior authority for the SBA to raise unsecured loan amounts during major disasters without limits, and adds notification triggers based on 10-year averages rather than just recent appropriations.
- Oversight Mechanisms: Adds multiple GAO and Inspector General reviews not previously required, focusing on recent shortfalls, rule changes, and disbursement patterns. The low-funding limits are temporary (4-year sunset), allowing future evaluation.
Potential Impacts
- On Government Agencies: Increases administrative burden on the SBA through more frequent reporting, budget detailing, and internal reviews, potentially improving long-term planning but straining resources short-term. Congressional committees gain better tools for oversight, which could lead to more timely appropriations. The Inspector General and GAO will need resources for mandated studies.
- On Citizens: Disaster-affected small businesses, homeowners, and nonprofits may face delays or restrictions in accessing unsecured loans (those without collateral) during funding shortfalls, potentially slowing recovery. However, required quick disbursements post-replenishment aim to minimize disruptions. Taxpayers benefit from safeguards against overuse of funds, reducing risk of budget overruns.
- On International Relations: Minimal direct impact, as the program is domestic-focused, though improved fiscal controls could indirectly support U.S. economic stability in disaster-prone areas.
Main Stakeholders Affected
- Small Business Administration (SBA): Primary implementer; faces new restrictions, reporting duties, and penalties, but gains guidance for better forecasting.
- Congressional Committees: Small Business and Appropriations Committees in both chambers receive enhanced data and reports, improving their ability to allocate funds and oversee the program.
- Disaster Victims: Small businesses, homeowners, renters, and nonprofits relying on SBA loans (e.g., after hurricanes or floods) may experience changes in loan availability and terms.
- Taxpayers and the Public: Benefit from accountability measures to ensure efficient use of federal funds.
- Government Watchdogs: GAO and SBA Inspector General tasked with evaluations, influencing future program reforms.
Notable Legal, Constitutional, or Political Implications
- Legal: Strengthens statutory controls on executive discretion in loan programs by limiting forgiveness (tying it to congressional approval) and prohibiting new rules that increase program costs without authorization. Ensures compliance with federal credit reform laws by emphasizing cost estimates. The 4-year sunset on funding limits allows for periodic reassessment, avoiding permanent rigidity.
- Constitutional: Aligns with Congress's power of the purse (Article I) by mandating notifications and budget details, enhancing legislative oversight of executive spending without infringing on separation of powers.
- Political: Promotes bipartisan fiscal accountability (introduced by Republicans but reported with amendments), potentially reducing controversies over shortfalls like the 2024 incident. Could spark debates on balancing aid speed with cost controls, influencing future disaster relief bills. No overt bias; focuses on procedural reforms to build trust in the program.
This summary was generated by AI and may contain inaccuracies. Refer to the official source document for the authoritative text.
Sponsor
Cosponsors (9)
Sen. Ernst, Joni [R-IA], Sen. Scott, Tim [R-SC], Sen. Tillis, Thomas [R-NC], Sen. Husted, Jon [R-OH], Sen. Justice, James C. [R-WV], Sen. Young, Todd [R-IN], Sen. Risch, James E. [R-ID], Sen. Shaheen, Jeanne [D-NH], Sen. Kennedy, John [R-LA]
Recent Actions
- 2025-03-04: Placed on Senate Legislative Calendar under General Orders. Calendar No. 22.
- 2025-03-04: Committee on Small Business and Entrepreneurship. Reported by Senator Ernst with an amendment in the nature of a substitute. Without written report.
- 2025-03-04: Committee on Small Business and Entrepreneurship. Reported by Senator Ernst with an amendment in the nature of a substitute. Without written report.
- 2025-02-20: Committee on Small Business and Entrepreneurship. Ordered to be reported with an amendment in the nature of a substitute favorably.
- 2025-01-29: Read twice and referred to the Committee on Small Business and Entrepreneurship.
- 2025-01-29: Introduced in Senate
Bill Versions
- Disaster Loan Accountability and Reform Act — issued 2025-01-29 — PDF (13 pages)
- Disaster Loan Accountability and Reform Act — issued 2025-03-04 — PDF (28 pages)