HR4238-119

What This Bill Does

The Disaster Loan Accountability and Reform Act (DLARA) overhauls transparency and accountability requirements for the Small Business Administration's disaster loan program. Following a funding shortfall crisis in late 2024, this bill mandates more rigorous reporting to Congress, requires early warning notifications when loan funds run low, and orders multiple investigations into what went wrong with budget forecasting and fund management.

Who Benefits and How

• Congressional oversight committees gain significantly enhanced visibility into SBA disaster loan operations, receiving mandatory monthly reports with detailed projections, early warning when funds drop below 10% of appropriations, and explanations for any budget variances.
• Future disaster loan applicants benefit from reforms designed to prevent future funding shortfalls that could delay or deny their loan applications.
• Taxpayers benefit from increased accountability, as the bill requires multiple GAO reports analyzing the true cost of recent rule changes that expanded loan limits and loosened collateral requirements.

Who Bears the Burden and How

• The SBA Administrator faces substantial new compliance burdens: monthly reporting requirements with a travel ban penalty for late reports, mandatory budget correction plans within 30 days, quarterly follow-up reports, and personal accountability for Congressional notifications when funds run low.
• The SBA as an agency must support multiple concurrent investigations - an Inspector General review due within 180 days and at least three separate GAO studies - consuming staff time and resources.
• Disaster loan borrowers during funding shortfalls may face temporary limits on loan amounts (restricted to collateral-backed amounts only) until Congress appropriates additional funds.

Key Provisions

• Requires 24-hour Congressional notification when disaster loan funds drop below 10% of the 10-year average cost
• Imposes a prohibition on official travel by the SBA Administrator if monthly disaster loan reports are late
• Mandates separate budget line items comparing SBA disaster loan and COVID-EIDL loan costs against 10-year averages
• Orders Inspector General investigation into the 2024 funding shortfall, including analysis of whether SBA's internal reorganization contributed to the problem
• Requires GAO to analyze the cost impact of 2023-2024 rule changes that increased loan limits and relaxed collateral requirements
• Authorizes the Administrator to limit loan obligations to collateral-backed amounts during funding emergencies, with mandatory disbursement of remaining amounts within 14 days of new appropriations
• Sunsets the emergency funding limitation authority after 4 years