S. 300 — DLARA

This section defines, for purposes of this Act, the terms "Administration" and "Administrator" to mean the Small Business Administration and its Administrator, respectively, and "appropriate committees of Congress" to mean the Senate Committee on Small Business and Entrepreneurship and Senate Committee on Appropriations and the House Committee on Small Business and House Committee on Appropriations.

This section revises monthly accounting reports to Congress on the Small Business Administration's disaster loan program (i.e., section 7(b) loans to businesses, homeowners, and nonprofits for physical damage and economic injury from declared disasters) by (1) requiring submission not later than the fifth business day of each month without limitation to the applicable period for a major disaster (previously required only during such period); (2) replacing the estimate under subparagraph (E) of how long available loan funding will last with estimates of the dates when funding will reach 10% of the most recent appropriation and when funds will be depleted, and adding subparagraph (J) requiring a summary of any changes to estimates or assumptions on obligations and expenditures with supporting data; and (3) prohibiting obligation of funds for official travel by the Administrator until any required report is submitted.

This section amends federal budget submission requirements (31 U.S.C. 1105) to direct the President's annual budget to include separate statements of (1) the amount of appropriations requested for the relevant fiscal year and the 10-year average cost—plus an explanation for any difference—for both Small Business Administration (SBA) disaster loans (i.e., direct loans under section 7(b) of the Small Business Act other than COVID-EIDL loans) and COVID-EIDL loans (i.e., direct loans under section 7(b) authorized by section 1110 of the CARES Act); and (2) the same information for administrative costs relating to those loans.

This section establishes limitations on loan forgiveness and debt collection under Section 7 of the Small Business Act, which authorizes the Small Business Administration's (SBA) primary loan programs (i.e., 7(a), 504, microloans, and disaster loans). Specifically, it prohibits the SBA Administrator from (1) forgiving any such loan unless Congress authorizes the forgiveness or (2) compromising on, suspending, or ending collections on a debt owed to the SBA under specified debt collection authorities; if the Administrator seeks to discharge such a debt, the Administrator must refer it to the Department of the Treasury for collection action, including any final determination on suspending or ending collections.

This section amends the Small Business Act to (1) require the SBA Administrator, not later than 24 hours after the unobligated balance available for the costs of direct disaster loans under section 7(b) falls below 10% of the most recent such appropriation, to notify the Appropriations and Small Business Committees of the House and Senate and, during the period from the next business day until additional funds are appropriated, limit obligations for such direct loans to amounts requiring collateral; and (2) repeal the authority under section 7(d)(6) to increase, in the event of a major disaster, the maximum amount of disaster home loans for which collateral is not required.

This section prohibits the Administrator of the Small Business Administration from issuing any rule—as defined in 5 U.S.C. 551—that increases the cost—as defined in the Federal Credit Reform Act of 1990 (2 U.S.C. 661a)—to the disaster loan program under section 7(b) of the Small Business Act (15 U.S.C. 636(b)), beginning on the date of enactment. (As background, section 7(b) authorizes direct loans to businesses, homeowners, and nonprofits to repair or replace real or personal property, and provide working capital, damaged or lost due to a declared disaster.)

This section defines a covered final rule as either (1) the SBA 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). It directs the Comptroller General of the United States to submit to the Senate Committees on Small Business and Entrepreneurship and Appropriations and the House Committees on Small Business and Appropriations, not later than one year after enactment, a report on (1) the cost (as defined in section 502 of the Federal Credit Reform Act of 1990) of changes made by the covered final rules to section 7(b)(1) loans of the Small Business Act—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 term modifications—and (2) the effect of those changes on the subsidy for such loans. (Section 7(b)(1) loans provide disaster assistance to businesses, homeowners, and nonprofits to repair or replace disaster-damaged property or cover economic injury.)

This section directs the SBA Inspector General to review the circumstances of a funding shortfall for direct disaster loans under section 7(b) of the Small Business Act (15 U.S.C. 636(b))—as described in letters from President Biden (October 4, 2024) and the SBA Administrator (October 10, 2024)—including (1) any statutory reporting or notification failures to Congress; (2) reasons for obligating or expending funds for significantly divergent purposes; (3) accuracy of related projections and estimates; (4) internal controls for managing such funds; (5) impacts of any SBA reorganization, including transfer of section 7(b) 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 quarterly 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 requires 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 for amounts made available for the cost of direct disaster loans under section 7(b) of the Small Business Act; and (2) every 90 days thereafter until 90 days after all such corrections are implemented, reports detailing actions taken to implement the corrections and explaining how each action relates to those corrections.