S.397 - Small Business Disaster Damage Fairness Act of 2025 (119th Congress)
Summary
S.397, the Small Business Disaster Damage Fairness Act of 2025, aims to amend the Small Business Act, specifically concerning disaster loans. The bill increases the minimum disaster loan amount for which the Small Business Administration (SBA) may require collateral from $14,000 to $50,000. It also mandates a GAO report on the performance and default rates of disaster loans, and requires the SBA to tailor its outreach to rural communities.
Expected Effects
The act will likely result in small businesses having greater access to disaster loans without needing to provide collateral for smaller amounts. The GAO report will provide data on the effectiveness of these loans and the impact of the collateral changes. Furthermore, the SBA will be required to improve its outreach to rural communities, potentially increasing their access to disaster relief funds.
Potential Benefits
- Increased access to disaster loans for small businesses without immediate collateral requirements.
- More tailored outreach to rural communities, ensuring they are aware of and can access disaster loan programs.
- Data-driven insights into the performance of disaster loans through the GAO report, potentially leading to improvements in the program.
- Reduced burden on small businesses during disaster recovery by delaying collateral requirements.
- Simplification of the loan application process for smaller disaster loans.
Potential Disadvantages
- Potential increase in default rates on disaster loans due to the higher threshold for collateral requirements.
- The cost of the GAO report and the implementation of targeted outreach programs may strain the SBA's budget.
- Urban communities might feel underserved if the focus shifts predominantly to rural areas.
- There may be a delay in receiving funds as the SBA adjusts its outreach and marketing plans.
- The increased loan amounts without collateral could lead to some businesses taking on more debt than they can manage.
Constitutional Alignment
The bill appears to align with the spirit of the Constitution, particularly the General Welfare Clause (Preamble), by aiming to support small businesses in times of disaster. Congress's authority to enact such legislation falls under its enumerated powers to regulate commerce and provide for the general welfare. The requirement for a GAO report ensures accountability and oversight, aligning with the principles of checks and balances.
Impact Assessment: Things You Care About ⓘ
This action has been evaluated across 19 key areas that matter to you. Scores range from 1 (highly disadvantageous) to 5 (highly beneficial).