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.
The bill would amend the Small Business Act to provide temporary relief for new SBA disaster loans. For disasters declared after the bill’s enactment, the SBA Administrator would set the loan’s interest rate at zero percent and defer principal payments for a 12-month period starting from when the loan is disbursed. In effect, eligible borrowers would not owe interest and would not have to make principal payments during that first year. This applies only to loans made under subsection (b) for disasters declared after enactment; it does not specify terms beyond the 12-month window, nor does it retroactively affect existing loans. The stated purpose appears to be to ease cash-flow pressures on small businesses affected by recent disasters by reducing near-term debt service costs. Potential impacts include a cost to the federal government (from foregone interest) and administrative considerations for implementing and tracking the temporary waiver. The bill does not clarify what happens after the 12-month period ends, or whether other charges (fees, penalties) would be affected.
Key Points
- 1Adds a new provision (7(d)(9)) to the Small Business Act that creates a temporary waiver for certain disaster loans.
- 2Applies only to disaster loans made under subsection (b) for disasters declared on or after the enactment date.
- 3For the 12-month period beginning on the loan’s disbursement date, sets the loan interest rate to zero percent and defers principal payments.
- 4The 12-month window is limited to new loans (disbursed after enactment) for newly declared disasters; it does not address existing loans or disasters declared before enactment.
- 5The bill does not specify post-12-month terms, so normal terms would presumably resume after the waiver period unless further legislation or program rules provide details.