On July 24, 2024, the SBA issued a direct final rule that amends the regulations governing the Disaster Loan Program. (89 Fed. Reg. 59826, July 24, 2024). Specifically, the rule establishes new procedures for SBA to determine whether a loan applicant has access to credit elsewhere. Under the Small Business Act, SBA is required to determine whether a disaster survivor can access credit elsewhere by analyzing their cash flow and disposable assets. The rule indicates that SBA may base its determination on the credit score modeling, which adheres to that utilized by non-Federal sources.
The rule also increased the unsecured threshold for physical damage loans under Major Disaster declarations and for Economic Injury Disaster Loans (EIDL) under all disaster declarations. SBA increased the unsecured loan threshold from $25,000 to $50,000 for EIDL loans for all disasters and for physical home and business loans for Major Disaster declarations.
This rule was issued in response to Executive Order 14030, which tasked SBA with developing recommendations for improving how Federal financial management and reporting can incorporate climate-related financial risk, especially as that risk relates to Federal lending programs.