S300-119

1. Short title This Act may be cited as the Disaster Loan Accountability and Reform Act or the DLARA.

3. Definitions In this Act— the terms Administration and Administrator mean the Small Business Administration and the Administrator thereof, respectively; the term appropriate committees of Congress means the Committee on Small Business and Entrepreneurship and the Committee on Appropriations of the Senate and the Committee on Small Business and the Committee on Appropriations of the House of Representatives; and the term SBA disaster loan means a direct loan authorized by section 7(b) of the Small Business Act (15 U.S.C. 636(b)), other than a loan that was authorized under section 1110 of the CARES Act (15 U.S.C. 9009).

4. Monthly disaster loan reports Section 12091(a) of the Small Business Disaster Response and Loan Improvements Act of 2008 (15 U.S.C. 636k(a)) is amended— in paragraph (1)— by striking during the applicable period for a major disaster; and by striking for that major disaster; in paragraph (2)— in subparagraph (E), by striking how long the available funding for such loans will last and inserting the date at which available funding for such loans will reach 10 percent of the most recent appropriation and the date at which the funds will be depleted; in subparagraph (H), by striking and at the end; in subparagraph (I), by striking the period at the end and inserting ; and; and by adding at the end the following: a summary detailing any changes to estimates or assumptions on obligations and expenditures, including data supporting these changes. by adding at the end the following: If the Administrator does not submit a report required to be submitted under paragraph (1) by the required date, no funds may be obligated for official travel by the Administrator until the Administrator submits the report. (J)a summary detailing any changes to estimates or assumptions on obligations and expenditures, including data supporting these changes.; and (3)Prohibition on official travelIf the Administrator does not submit a report required to be submitted under paragraph (1) by the required date, no funds may be obligated for official travel by the Administrator until the Administrator submits the report..

5. Budget request relating to disaster loans Section 1105 of title 31, United States Code, is amended— in subsection (a), by adding at the end the following: separate statements of— the amount of appropriations requested for the fiscal year for which the budget is submitted for the cost of SBA disaster loans, the 10-year average of the cost of SBA disaster loans, and an explanation for any difference between the amount requested and the 10-year average cost; and the amount of appropriations requested for the fiscal year for which the budget is submitted for the cost of COVID-EIDL loans, the 10-year average of the cost of COVID-EIDL loans, and an explanation for any difference between the amount requested and the 10-year average cost. separate statements of— the amount of appropriations requested for the fiscal year for which the budget is submitted for administrative costs relating to SBA disaster loans, the 10-year average of such administrative costs, and an explanation for any difference between the amount requested and the 10-year average costs; and the amount of appropriations requested for the fiscal year for which the budget is submitted for administrative costs relating to COVID-EIDL loans, the 10-year average of such administrative costs, and an explanation for any difference between the amount requested and the 10-year average costs. by adding at the end the following: In paragraphs (39) and (40) of subsection (a)— the term COVID-EIDL loan means a direct loan under section 7(b) of the Small Business Act (15 U.S.C. 636(b)) that was authorized under section 1110 of the CARES Act (15 U.S.C. 9009); and the term SBA disaster loan means a direct loan authorized by section 7(b) of the Small Business Act (15 U.S.C. 636(b)), other than a loan that was authorized under section 1110 of the CARES Act (15 U.S.C. 9009). (39)separate statements of— (A)the amount of appropriations requested for the fiscal year for which the budget is submitted for the cost of SBA disaster loans, the 10-year average of the cost of SBA disaster loans, and an explanation for any difference between the amount requested and the 10-year average cost; and(B)the amount of appropriations requested for the fiscal year for which the budget is submitted for the cost of COVID-EIDL loans, the 10-year average of the cost of COVID-EIDL loans, and an explanation for any difference between the amount requested and the 10-year average cost. (40)separate statements of—(A)the amount of appropriations requested for the fiscal year for which the budget is submitted for administrative costs relating to SBA disaster loans, the 10-year average of such administrative costs, and an explanation for any difference between the amount requested and the 10-year average costs; and(B)the amount of appropriations requested for the fiscal year for which the budget is submitted for administrative costs relating to COVID-EIDL loans, the 10-year average of such administrative costs, and an explanation for any difference between the amount requested and the 10-year average costs.; and (j)In paragraphs (39) and (40) of subsection (a)—(1)the term COVID-EIDL loan means a direct loan under section 7(b) of the Small Business Act (15 U.S.C. 636(b)) that was authorized under section 1110 of the CARES Act (15 U.S.C. 9009); and(2)the term SBA disaster loan means a direct loan authorized by section 7(b) of the Small Business Act (15 U.S.C. 636(b)), other than a loan that was authorized under section 1110 of the CARES Act (15 U.S.C. 9009)..

6. Limitations on disaster loans Section 7(b) of the Small Business Act (15 U.S.C. 636(b)) is amended— by redesignating the second paragraph designated as paragraph (16), relating to statute of limitations, as added by the COVID–19 EIDL Fraud Statute of Limitations Act of 2022 (Public Law 117–165; 136 Stat. 1363), as paragraph (18); and by inserting after paragraph (16), relating to disaster declarations in rural areas, as added by the Disaster Assistance for Rural Communities Act (Public Law 117–249; 136 Stat. 2350), the following: Not later than 24 hours after the unobligated balance of amounts available for the cost of direct loans authorized by this subsection is less than 10 percent of the 10-year average annual cost provided in the most recent Presidential budget request required under section 1105(a)(39)(A) of title 31, United States Code, or, if unavailable, the 10-year average annual cost for the immediately preceding 10-year period of SBA disaster loans (as defined in section 1105(j) of such title), the Administrator shall notify the Committee on Appropriations and the Committee on Small Business and Entrepreneurship of the Senate and the Committee on Appropriations and the Committee on Small Business of the House of Representatives. During the period beginning on the first business day occurring on or after the date by which the Administrator is required to notify Congress under subparagraph (A) and ending on the date on which additional amounts are appropriated for such costs, the Administrator may limit the obligation of funds for a direct loan authorized under this subsection to the amount of such a loan for which collateral is required. In carrying out the authority to enact a limitation under (B), the Administrator shall apply that limitation with respect to amounts obligated for all direct loans authorized under this subsection during the period described in subparagraph (B). If the Administrator exercises the authority under (B), the Administrator shall, not later than 14 days after the date on which additional amounts are appropriated under subparagraph (B), obligate and disburse on a regular schedule any remaining amount outstanding on a direct loan authorized under this subsection. Effective on the date that is 4 years after the date of enactment of this Act, section 7(b) of the Small Business Act (15 U.S.C. 636(b)) is amended— by striking paragraph (17); and by redesignating paragraph (18) as paragraph (17). Not later than 1 year after the date of enactment of this Act, in the event that the Administrator exercises the authority described in paragraph (17)(B) of section 7(b) of the Small Business Act (15 U.S.C. 636(b)), as added by subsection (a), the Comptroller General of the United States shall submit to the appropriate committees of Congress a report assessing the actual and potential impact of the amendments made by subsection (a) during the period covered by the report. (17)Requirements when funding is low(A)In generalNot later than 24 hours after the unobligated balance of amounts available for the cost of direct loans authorized by this subsection is less than 10 percent of the 10-year average annual cost provided in the most recent Presidential budget request required under section 1105(a)(39)(A) of title 31, United States Code, or, if unavailable, the 10-year average annual cost for the immediately preceding 10-year period of SBA disaster loans (as defined in section 1105(j) of such title), the Administrator shall notify the Committee on Appropriations and the Committee on Small Business and Entrepreneurship of the Senate and the Committee on Appropriations and the Committee on Small Business of the House of Representatives.(B)Limitation on obligating fundsDuring the period beginning on the first business day occurring on or after the date by which the Administrator is required to notify Congress under subparagraph (A) and ending on the date on which additional amounts are appropriated for such costs, the Administrator may limit the obligation of funds for a direct loan authorized under this subsection to the amount of such a loan for which collateral is required.(C)Authority to limit obligation of fundsIn carrying out the authority to enact a limitation under (B), the Administrator shall apply that limitation with respect to amounts obligated for all direct loans authorized under this subsection during the period described in subparagraph (B).(D)Requirement to disburse within 14 daysIf the Administrator exercises the authority under (B), the Administrator shall, not later than 14 days after the date on which additional amounts are appropriated under subparagraph (B), obligate and disburse on a regular schedule any remaining amount outstanding on a direct loan authorized under this subsection..

7. GAO report on SBA disaster loan account Not later than 180 days after the date of enactment of this Act, the Comptroller General of the United States shall submit to the Administrator and the appropriate committees of Congress a report on— the average weekly rate at which the Administration obligates the unobligated balance of amounts available for the cost of SBA disaster loans; the average amount, during the periods beginning on October 1, 2015 and ending on July 31, 2023 and beginning on July 31, 2023 and ending on the date of enactment of this Act, respectively, disbursed to a borrower each week, during the initial 12-week period in which a borrower receives amounts from an SBA disaster loan, beginning the day after the borrower accepts their loan, separated by home SBA disaster loan borrowers, business SBA disaster loan borrowers, and economic injury disaster loan borrowers; and the average amount of fully disbursed SBA disaster loans, originated during the period beginning on July 31, 2023 and ending on the date of enactment of this Act, with separate averages for SBA disaster loans delineated by home, business, and economic injury disaster loans. Not later than 90 days after the date on which the Comptroller General of the United States submits the report under subsection (a), the Administrator shall submit to the appropriate committees of Congress a response to the report, including an implementation plan for any recommendations in the report.

8. GAO report on disaster loan changes In this section, the term covered final rule means— the 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 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). Not later than 1 year after the date of enactment of this Act, the Comptroller General of the United States shall submit to the appropriate committees of Congress a report on— the cost (as defined in section 502 of the Federal Credit Reform Act of 1990 (2 U.S.C. 661a)) of the increase in the home loan lending limits for, the extension of the deferment period for, the expansion of mitigation options for, the modifications to the criteria for determining whether applicants can obtain credit elsewhere with respect to, the changes to collateral requirements for, and other changes to the terms and conditions of loans under section 7(b)(1) of the Small Business Act (15 U.S.C. 636(b)(1)) made by the covered final rules; and the effect on the subsidy for such loans of the changes contained in the covered final rules.

9. SBA Inspector General review In this section— the term covered amounts means amounts made available for the cost of direct loans authorized by section 7(b) of the Small Business Act (15 U.S.C. 636(b)); and the term Inspector General means the Inspector General of the Administration. The Inspector General shall conduct a review of the circumstances surrounding the funding shortfall with respect to covered amounts, as described in— the letter from President Joseph R. Biden, Jr. entitled Letter to Congress on Disaster Needs, dated October 4, 2024; and the letter from the Administrator submitted to the Chair and Ranking Members of the Committees on Appropriations of the Senate and the House of Representatives, dated October 10, 2024. The review required under paragraph (1) shall include the following with respect to the funding shortfall described in that paragraph: The identification of any report or notification required by statute that the Administration failed to provide to Congress with respect to the funding shortfall. The reason for any obligation or expenditure of covered amounts for a purpose that significantly diverged from the purpose for which the covered amounts were made available. An analysis of the accuracy of projections and estimates relevant to the divergences described in subparagraph (B). The identification and description of any internal controls in place to manage covered amounts. An analysis of the impact that any reorganization of the Administration, including the transfer of administrative authority for the program carried out under section 7(b) of the Small Business Act (15 U.S.C. 636(b)) to the Office of Capital Access of the Administration, may have had with respect to the funding shortfall. The identification of actions that the Administration can take to— improve the accuracy of information submitted by the President under section 1105(a) of title 31, United States Code, with respect to the Administration; prevent any future funding shortfall with respect to any account of the Administration; and improve the reports submitted to the appropriate committees of Congress under section 12091(a) of the Small Business Disaster Response and Loan Improvements Act of 2008 (15 U.S.C. 636k(a)). Any other matter determined relevant by the Inspector General. Not later than 180 days after the date of enactment of this Act, the Inspector General shall submit to the appropriate committees of Congress a report that contains the findings of the review carried out under subsection (b).

10. Budget and forecasting report regarding the cost of direct disaster loans Not later than 30 days after the date of enactment of this Act, the Administrator shall submit to the appropriate committees of Congress a report detailing corrections the Administration will make to improve forecasting, data quality, and budget assumptions relating to budget submissions relating to amounts made available for the cost of SBA disaster loans. Not later than 90 days after the date of enactment of this Act, and every 90 days thereafter until the date that is 90 days after the date on which all the corrections described in subsection (a) have been implemented, the Administrator shall submit to the appropriate committees of Congress a report— detailing the actions the Administration has taken to implement the corrections described in subsection (a); and explaining how each action detailed under paragraph (1) is directly related to implementing 1 or more corrections described in subsection (a).