H.R. 4238 — DLARA

This section defines key terms for purposes of the Act, including (1) Administration and Administrator as the Small Business Administration and its Administrator, respectively; (2) appropriate committees of Congress as the Senate Committees on Small Business and Entrepreneurship and Appropriations and the House Committees on Small Business and Appropriations; and (3) SBA disaster loan as a direct loan authorized by section 7(b) of the Small Business Act (15 U.S.C. 636(b)), excluding loans authorized under section 1110 of the CARES Act (15 U.S.C. 9009).

This section revises monthly reporting requirements to Congress on the operation of the SBA disaster loan program (i.e., low-interest loans to businesses, homeowners, and renters affected by declared disasters) by (1) requiring the SBA Administrator to submit reports not later than the fifth business day of each month on the preceding month's operations, rather than only during the applicable period for a major disaster; (2) replacing the prior estimate in reports of how long loan funding will last with estimates of the dates when available funding will reach 10% of the most recent appropriation and when funds will be depleted; (3) adding to report contents a summary detailing any changes to estimates or assumptions on obligations and expenditures, with supporting data; and (4) prohibiting the Administrator from obligating funds for official travel until any overdue report is submitted.

This section amends requirements for the President's annual budget submission (31 U.S.C. 1105) to direct inclusion of separate statements on (1) appropriations requested for the fiscal year for costs of Small Business Administration (SBA) disaster loans and COVID-EIDL loans, respectively, the 10-year average of such costs, and explanations for any differences; and (2) the same information for administrative costs relating to such loans. It defines COVID-EIDL loans as direct loans under section 7(b) of the Small Business Act authorized under section 1110 of the CARES Act and SBA disaster loans as other direct loans under that section (i.e., for small businesses suffering economic injury from a declared disaster).

This section establishes temporary requirements, effective for four years, for direct loans under the Small Business Administration (SBA) disaster loan program (i.e., Section 7(b) loans that provide financial assistance to businesses, homeowners, and renters for disaster-related physical damage and economic injury). It requires the SBA Administrator to notify congressional committees within 24 hours if the program's unobligated balance falls below 10% of the 10-year average annual cost from the most recent presidential budget request (or prior 10-year actuals, if unavailable); limits obligations during the period until new appropriations to direct loans requiring collateral (applied program-wide); and requires obligating and disbursing any remaining loan amounts within 14 days after replenishment on a regular schedule. It further requires the Government Accountability Office to submit a report to congressional committees within one year, if the limitation authority is exercised, assessing the provision's actual and potential impacts.

This section directs the Comptroller General of the United States to submit a report to the SBA Administrator and appropriate congressional committees within 180 days of enactment on (1) the average weekly rate of SBA obligations of the unobligated balance available for the cost of SBA disaster loans; (2) average weekly disbursements to borrowers during the initial 12-week period after loan acceptance, for the periods October 1, 2015, through July 31, 2023, and July 31, 2023, through enactment, separated by home, business, and economic injury disaster loan borrowers; and (3) average amounts of fully disbursed SBA disaster loans originated from July 31, 2023, through enactment, separated by home, business, and economic injury disaster loans. It further requires the SBA Administrator to submit a response to Congress within 90 days after receiving the report, including an implementation plan for any recommendations.

This section directs the Comptroller General of the United States to submit to the appropriate congressional committees, not later than one year after the date of enactment, a report on (1) the cost (as defined in the Federal Credit Reform Act of 1990) of changes made by two specified SBA final rules—entitled “Disaster Assistance Loan Program Changes to Maximum Loan Amounts and Miscellaneous Updates” (88 Fed. Reg. 39335, June 16, 2023; RIN 3245–AH91) and “Disaster Assistance Loan Program Changes to Unsecured Loan Amounts and Credit Elsewhere Criteria” (89 Fed. Reg. 59826, July 24, 2024; RIN 3245–AI08)—to loans under section 7(b)(1) of the Small Business Act (i.e., physical disaster loans for homeowners and businesses), including increases in home loan limits, extensions of the deferment period, expansions of mitigation options, modifications to credit elsewhere criteria, changes to collateral requirements, and other alterations to loan terms and conditions; and (2) the effect of those changes on the subsidy for such loans.

This section directs the SBA Inspector General to review the circumstances of a funding shortfall for direct loans under the Small Business Administration (SBA) disaster loan program (15 U.S.C. 636(b)), as described in a letter from President Biden dated October 4, 2024, and a letter from the SBA Administrator dated October 10, 2024. The review must identify (1) any statutorily required reports or notifications not provided to Congress; (2) reasons for any obligations or expenditures diverging from authorized purposes; (3) the accuracy of relevant projections and estimates; (4) internal controls for managing such funds; (5) the impact of any SBA reorganization, including transfer of program authority to the Office of Capital Access; (6) actions to improve presidential budget submissions under 31 U.S.C. 1105(a), prevent future shortfalls, and enhance congressional reports under 15 U.S.C. 636k(a); and (7) other relevant matters. The Inspector General must submit a report with findings to the appropriate congressional committees within 180 days of enactment.

This section directs the SBA Administrator to submit to the appropriate congressional committees (1) within 30 days of enactment, a report detailing corrections to improve forecasting, data quality, and budget assumptions relating to amounts available for the cost of direct disaster loans; and (2) reports at 90-day intervals thereafter—until 90 days after all such corrections are implemented—detailing actions taken to implement the corrections and explaining how each action relates to specific corrections.