To amend the Small Business Act to make disaster loans available for damages caused by prolonged power outages, and for other purposes.
- Sponsor
- Rep. Stevens, Haley M. [D-MI-11]
- Committees
- Small Business Committee (primary)
- Last action
- Apr 10, 2025
Bottom line
The bill broadens SBA disaster loan eligibility to encompass damages and economic injuries resulting from prolonged power outages, offering financial relief and promoting energy resilience for affected entities.
What it actually does
This bill expands the definition of "disaster" under the Small Business Act to include prolonged power outages, making small businesses and other eligible recipients affected by such outages eligible for Small Business Administration (SBA) disaster loans. It specifies that these loans can be used to purchase energy resilience systems, such as generators or solar panels, and to cover the cost of replacing lost food and drink due to the outage.
Proponents argue
Supporters argue that prolonged power outages, often caused by severe weather or infrastructure failures, can be as devastating to small businesses and homes as other natural disasters, warranting similar federal assistance. They contend that enabling the use of loan funds for energy resilience systems will help businesses become more self-sufficient and reduce future economic disruptions, while also providing crucial support for immediate losses like spoiled inventory.
Opponents contend
Opponents might argue that expanding the definition of "disaster" could strain the SBA's disaster loan program, potentially diverting resources from other critical disaster responses or increasing the federal debt. They might also contend that the criteria for "prolonged power outage" could be too broad or too narrow, leading to inconsistent application or unintended consequences, and that energy resilience investments should primarily be a business's or utility's responsibility, not a federal loan program's.
The bill is very short and straightforward, allowing for a quick and comprehensive understanding of its provisions.
Section 1, amending Section 7(b) of the Small Business Act (15 U.S.C. 636(b))
Expanding SBA Disaster Loan Eligibility for Prolonged Power Outages
This provision modifies the Small Business Act to include "prolonged power outages" as a type of disaster for which the Small Business Administration (SBA) can issue physical damage and economic injury disaster loans. It defines a prolonged power outage based on either significant uninsured losses for physical damage loans (40% loss for at least 25 entities) or a minimum 48-hour concurrent power loss for economic injury loans (for at least 25 entities). Crucially, it also allows loan recipients to use funds for energy resilience systems (like generators or solar panels) and to replace spoiled food and drink.
Supporters argue
Supporters argue this provision addresses a critical gap in disaster assistance, recognizing that prolonged power outages can cause substantial physical damage and economic disruption comparable to other declared disasters. They emphasize that allowing funds for resilience systems proactively strengthens communities against future outages, reducing long-term reliance on federal aid, and that covering food loss is a direct, practical benefit for affected individuals and businesses.
Critics contend
Critics might argue that this expansion could overstretch the SBA's resources, potentially delaying responses to traditional natural disasters or increasing the federal deficit. They may also question whether the defined thresholds (e.g., 25 entities, 48 hours) are appropriate or could lead to an excessive number of smaller, localized events qualifying for federal aid that might otherwise be handled by local or state resources, or private insurance.
Tradeoffs
The bill balances the need to provide relief for a common and impactful type of disruption against concerns about expanding federal programs and potential strain on existing resources. It also navigates the tension between immediate recovery (food replacement) and long-term prevention (resilience systems).
The bill defines "prolonged power outage" differently for physical damage loans (paragraph (1)(A)) versus economic injury loans (paragraph (2)). For physical damage, it requires 25 entities to each sustain at least 40% uninsured losses. For economic injury, it requires 25 entities to concurrently lose power for at least 48 hours.
Section 1, amending 15 U.S.C. 636(b), new paragraph (18)(C)
Why it matters:This is standard legislative practice to provide precise definitions and differentiate applicability based on the specific context of the existing law (physical vs. economic injury loans).
Case for: Proponents would argue that these differentiated definitions are necessary to accurately reflect the distinct impacts of power outages. Physical damage requires a high threshold of actual loss, while economic injury is better captured by the duration of the disruption, ensuring appropriate targeting of aid.
Case against: Critics might argue that having two different definitions for the same "prolonged power outage" could create confusion or administrative complexity, potentially leading to inconsistent application or making it harder for applicants to understand eligibility.
Estimated impact: This distinction directly impacts which events qualify for which type of SBA disaster loan, potentially affecting the number of eligible incidents and the total amount of federal aid disbursed for power outages.