To amend the Small Business Act to waive the accrual of interest and payments for certain disaster loans for a year, and for other purposes.
- Sponsor
- Rep. Neguse, Joe [D-CO-2]
- Committees
- Small Business Committee (primary)
- Last action
- May 21, 2025
Bottom line
The bill offers a one-year grace period for small businesses and individuals impacted by future disasters, providing immediate financial relief by waiving interest and deferring principal payments on SBA disaster loans.
What it actually does
This bill amends the Small Business Act to provide a 12-month waiver of interest accrual and deferral of principal payments for certain disaster loans. Specifically, for disaster loans disbursed by the Small Business Administration (SBA) for disasters declared on or after the bill's enactment date, borrowers would pay zero percent interest and make no principal payments for the first year following disbursement.
Proponents argue
Proponents argue that this bill provides crucial immediate financial relief to small businesses and individuals recovering from disasters, allowing them to focus resources on rebuilding without the added burden of loan payments and interest during the critical first year. This measure would help prevent early defaults and support long-term recovery efforts, particularly for those who have lost income or property.
Opponents contend
Opponents might contend that while well-intentioned, this bill could increase the federal deficit by foregoing interest revenue and delaying principal repayments, potentially shifting the financial burden to taxpayers. They may also argue that it could create an expectation for similar waivers in the future, setting a precedent that impacts the financial sustainability of the SBA's disaster loan program.
The bill is exceptionally short and clear, making it very accessible for any reader to understand its core provisions quickly.
Section 1, amending 15 U.S.C. 636(d)
Waiver of Interest Accrual and Payments for Certain Disaster Loans
This provision mandates that for Small Business Administration (SBA) disaster loans issued for disasters declared on or after the bill's enactment, the SBA Administrator must set the interest rate at zero percent for the first 12 months. Additionally, borrowers will not be required to make principal payments during this initial 12-month period, offering a significant financial reprieve immediately following a disaster.
Supporters argue
Supporters argue that this provision is a critical lifeline for disaster victims, allowing them to allocate scarce resources to immediate recovery needs rather than debt service. It reduces the initial financial strain, improves the likelihood of successful rebuilding, and prevents early loan defaults, ultimately strengthening community resilience.
Critics contend
Critics might argue that while beneficial to borrowers, this provision could strain the SBA's disaster loan program by reducing its revenue stream from interest payments. This could necessitate increased federal appropriations to cover administrative costs or potential losses, or it could lead to higher interest rates for other loan programs to compensate.
Tradeoffs
The provision balances the immediate financial relief for disaster-stricken borrowers against the potential long-term fiscal impact on the federal government and the sustainability of the SBA's disaster loan program. It prioritizes rapid recovery and reduced initial burden for individuals and businesses over immediate revenue generation for the government.