"House Passes Velázquez Amendment to Reduce Collateral Burden for Small Businesses Hurt by Natural Disasters"
Summary
A release dated July 29, 2022 reporting House passage of H.R. 5118, the Wildfire Response and Drought Resiliency Act, described as a package of 49 bills, including a bipartisan amendment by Chairwoman Nydia M. Velazquez (D-NY) and Rep. Garrett Graves (R-LA) to permanently raise the collateral threshold on SBA disaster loans. The release says the RISE After Disaster Act of 2015 eliminated collateral requirements for small business disaster loans of $25,000 or less. It states that this change is due to sunset on Nov. 25, 2022, when collateral will be required for loans of $14,000 or more, and that the amendment will permanently set the unsecured credit threshold at $25,000. Velázquez is quoted citing a Government Accountability Office finding that disaster loans with collateral performed comparably to those without.
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House Passes Velázquez Amendment to Reduce Collateral Burden for Small Businesses Hurt by Natural Disasters July 29, 2022 Washington, D.C.— Today, the House passed H.R. 5118, the Wildfire Response and Drought Resiliency Act, a package of 49 bills that will help protect communities against catastrophic wildfires, enhance drought resiliency, and ensure a whole-of-government approach to wildfire and drought issues. The bill included a bipartisan amendment offered by Chairwoman Nydia M. Velazquez (D-NY) and Rep. Garrett Graves (R-LA) that would permanently raise the collateral threshold on SBA disaster loans to make it easier for disaster victims to obtain capital to rebuild their homes and businesses. “A recent report issued by the Government Accountability Office found that disaster loans with collateral performed comparably to those without collateral. Given this finding, it makes sense to help victims of disasters to rebuild quickly, particularly when they’ve lost everything to hurricane, flood, or fire,” said Chairwoman Velázquez. “As we continue to experience stronger and more frequent disasters, it is imperative that Congress enact policies to help communities get back on their feet and maximize support when they need it most.” In 2015, Congress enacted the RISE After Disaster Act of 2015, a bill that included a provision to eliminate collateral requirements for small business disaster loans of $25,000 or less. The bill was intended to expedite access to urgently needed capital for disaster survivors and increase the amount of funds a small business can receive without having to pledge their home and/or business as collateral. This change is due to sunset on Nov. 25, 2022, when collateral requirements for SBA disaster assistance will be required for loans of $14,000 or more. Chairwoman Velázquez’s amendment will permanently set the unsecured credit threshold for SBA’s Disaster Loans at $25,000. “There are at least 40 states and 2 territories with ongoing disaster declarations for drought. The Small Business Administration is currently serving the millions of small businesses and residents in those states to provide relief against economic loss,” said Chairwoman Velázquez. “This amendment will give the millions of borrowers hurt by any natural disaster, including wildfires and droughts, more support and peace of mind during a stressful and traumatic time.”
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