SBA Disaster Loan Limits: Policy Options and Considerations

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Summary
~~September 20, 2022~~March 1, 2023
The Small Business Administration (SBA) Disaster Loan Program provides disaster loans to The Small Business Administration (SBA) Disaster Loan Program provides disaster loans to
eligible households and businesses to help them rebuild and recover after a disaster. SBA disaster eligible households and businesses to help them rebuild and recover after a disaster. SBA disaster
Bruce R. Lindsay
loans include (1) Personal Property Disaster Loans, (2) Real Property Disaster Loans, (3) loans include (1) Personal Property Disaster Loans, (2) Real Property Disaster Loans, (3)
Specialist in American Specialist in American
Business Physical Disaster Loans, and (4) Economic Injury Disaster Loans (EIDL). As described Business Physical Disaster Loans, and (4) Economic Injury Disaster Loans (EIDL). As described
National Government National Government
in this report, each type of loan has a maximum limit that has changed over time. in this report, each type of loan has a maximum limit that has changed over time.

 
R. Corinne Blackford
Personal Property Disaster Loans provide creditworthy homeowners or renters provide creditworthy homeowners or renters
Analyst in Small Business Analyst in Small Business
located in a declared disaster area with up to $40,000 to repair or replace personal located in a declared disaster area with up to $40,000 to repair or replace personal
and Economic and Economic
property owned by the survivor; property owned by the survivor;
Development Policy Development Policy
  Real Property Disaster Loans provide creditworthy homeowners located in a declared provide creditworthy homeowners located in a declared

disaster area with up to $200,000 to repair or restore the homeowner’s primary residence disaster area with up to $200,000 to repair or restore the homeowner’s primary residence
to its pre-disaster condition; to its pre-disaster condition;

  Business Physical Disaster Loans provide businesses located in a declared disaster area with up to $2 provide businesses located in a declared disaster area with up to $2
million to repair or replace damaged physical property including machinery, equipment, fixtures, inventory, million to repair or replace damaged physical property including machinery, equipment, fixtures, inventory,
and leasehold improvements that are not covered by insurance; and and leasehold improvements that are not covered by insurance; and
  EIDLs provide businesses located in a declared disaster area with up to $2 million to help meet financial provide businesses located in a declared disaster area with up to $2 million to help meet financial
obligations and operating expenses that could have been met had the disaster not occurred. EIDL loan obligations and operating expenses that could have been met had the disaster not occurred. EIDL loan
proceeds can only be used for working capital necessary to enable the business or organization to alleviate proceeds can only be used for working capital necessary to enable the business or organization to alleviate
the specific economic injury and to resume normal operations. Loan amounts for EIDLs are based on actual the specific economic injury and to resume normal operations. Loan amounts for EIDLs are based on actual
economic injury and financial needs, regardless of whether the business suffered any property damage. economic injury and financial needs, regardless of whether the business suffered any property damage.
The maximum amount that can be provided for a disaster loan, or disaster loan limit, was first established in SBA regulations The maximum amount that can be provided for a disaster loan, or disaster loan limit, was first established in SBA regulations
in 1968. In 1980, Congress began establishing disaster loan limits in statute, followed by SBA regulation updates. in 1968. In 1980, Congress began establishing disaster loan limits in statute, followed by SBA regulation updates.
Historically, limits for business disaster loans in SBA regulations have been for the same amount as set in statute, whereas Historically, limits for business disaster loans in SBA regulations have been for the same amount as set in statute, whereas
limits on home disaster loans in SBA regulations have been for a lesser amount than set in statute. SBA is authorized to limits on home disaster loans in SBA regulations have been for a lesser amount than set in statute. SBA is authorized to
establish loan limits lower in regulation than in statute because the statute establishes a ceiling for disaster loans, but not a establish loan limits lower in regulation than in statute because the statute establishes a ceiling for disaster loans, but not a
floor. In 2008, Congress increased the disaster loan limit in statute to $2 million; SBA only revised the business loan limits in floor. In 2008, Congress increased the disaster loan limit in statute to $2 million; SBA only revised the business loan limits in
regulation but not the home loan limit. Consequently, limits on disaster home loans ($40,000 for personal property disaster regulation but not the home loan limit. Consequently, limits on disaster home loans ($40,000 for personal property disaster
loans and $200,000 for real property disaster loans) have not changed since 1994, when SBA last adjusted disaster loan limits loans and $200,000 for real property disaster loans) have not changed since 1994, when SBA last adjusted disaster loan limits
in federal regulation. in federal regulation.
It could be argued that disaster loan limits, particularly those for home disaster loans, should be increased to account for It could be argued that disaster loan limits, particularly those for home disaster loans, should be increased to account for
inflation. A $200,000 home disaster loan in 1994 is worth about $105,000 in 2022 dollars and a $2 million business disaster inflation. A $200,000 home disaster loan in 1994 is worth about $105,000 in 2022 dollars and a $2 million business disaster
loan in 2008 is worth about $1.6 million in 2022 dollars. It could also be argued that home disaster loan limits should more loan in 2008 is worth about $1.6 million in 2022 dollars. It could also be argued that home disaster loan limits should more
accurately reflect current home prices because some homes may be completely destroyed by a disaster. For example, the accurately reflect current home prices because some homes may be completely destroyed by a disaster. For example, the
Federal Reserve Bank of St. Louis indicates that, in the first quarter of 2022, the median sales price of a house sold in the Federal Reserve Bank of St. Louis indicates that, in the first quarter of 2022, the median sales price of a house sold in the
United States was $428,700. United States was $428,700.
An opposing argument is that disaster assistance—even in the form of a government loan—is intended to supplement, not An opposing argument is that disaster assistance—even in the form of a government loan—is intended to supplement, not
replace, private insurance. As a result, it could be argued that increasing disaster loan limits would induce moral hazard. replace, private insurance. As a result, it could be argued that increasing disaster loan limits would induce moral hazard.
This report provides an overview of the regulatory and statutory history of SBA disaster loan limits followed by policy This report provides an overview of the regulatory and statutory history of SBA disaster loan limits followed by policy
options that include information about inflation, construction costs, and median home values and home price trends. This options that include information about inflation, construction costs, and median home values and home price trends. This
report also includes brief descriptions of SBA disaster loan categories. report also includes brief descriptions of SBA disaster loan categories.
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Introduction
Since 1953, the Small Business Administration (SBA) Disaster Loan Program has provided Since 1953, the Small Business Administration (SBA) Disaster Loan Program has provided
disaster loans to eligible households and businesses to help them rebuild and recover after a disaster loans to eligible households and businesses to help them rebuild and recover after a
disaster. Disaster loans for individuals and households (known collectively as home disaster disaster. Disaster loans for individuals and households (known collectively as home disaster
loans) fall into two categories: (1) Personal Property Disaster Loans and (2) Real Property loans) fall into two categories: (1) Personal Property Disaster Loans and (2) Real Property
Disaster Loans. Disaster loans for businesses (known collectively as business disaster loans) also Disaster Loans. Disaster loans for businesses (known collectively as business disaster loans) also
fall into two categories: (1) Business Physical Disaster Loans, and (2) Economic Injury Disaster fall into two categories: (1) Business Physical Disaster Loans, and (2) Economic Injury Disaster
Loans (EIDL). Loans (EIDL).
Through the years, Congress has established disaster loan limits (or caps) in statute establishing a Through the years, Congress has established disaster loan limits (or caps) in statute establishing a
maximum amount of money that can be borrowed through these programs for any one disaster. maximum amount of money that can be borrowed through these programs for any one disaster.
Historically, businesses have been eligible for the full amount set in statute whereas individuals Historically, businesses have been eligible for the full amount set in statute whereas individuals
and households have been eligible for a lesser amount set in federal regulation by SBA. This is and households have been eligible for a lesser amount set in federal regulation by SBA. This is
presumably because the costs associated with rebuilding a home are less than a business. Smaller presumably because the costs associated with rebuilding a home are less than a business. Smaller
loan amounts may help the SBA provide more loans to individuals and households if there are loan amounts may help the SBA provide more loans to individuals and households if there are
budgetary limitations for these programs.1 The SBA Administrator is authorized to set the limit at budgetary limitations for these programs.1 The SBA Administrator is authorized to set the limit at
a lower rate because the statutory language establishes a ceiling for disaster loans but does not a lower rate because the statutory language establishes a ceiling for disaster loans but does not
establish a floor.2 establish a floor.2
The current maximum amount available to individuals and households for home disaster loans The current maximum amount available to individuals and households for home disaster loans
was set in regulation by the SBA Administrator in 1994. They are (1) $40,000 for Personal was set in regulation by the SBA Administrator in 1994. They are (1) $40,000 for Personal
Property Disaster Loans; and (2) $200,000 for Real Property Disaster Loans. The current Property Disaster Loans; and (2) $200,000 for Real Property Disaster Loans. The current
maximum amount available for Business Physical Disaster Loans and EIDLs is $2 million, the maximum amount available for Business Physical Disaster Loans and EIDLs is $2 million, the
same amount that was set in statute in 2008 (seesame amount that was set in statute in 2008 (see Figure 1).3 3
For small business borrowers that are considered major employers and designated as a Major For small business borrowers that are considered major employers and designated as a Major
Source of Employment (MSE), the SBA may, under specified circumstances, exceed the $2 Source of Employment (MSE), the SBA may, under specified circumstances, exceed the $2
million loan limit to avoid substantial unemployment in a disaster area. P.L. 110-246 included a million loan limit to avoid substantial unemployment in a disaster area. P.L. 110-246 included a
provision granting the SBA Administrator this waiver authority.4 The SBA has granted waivers provision granting the SBA Administrator this waiver authority.4 The SBA has granted waivers
for eligible MSEs in the past. For example, in FY2018, the SBA approved seven (out of 826) for eligible MSEs in the past. For example, in FY2018, the SBA approved seven (out of 826)

1 For more information on SBA disaster loan funding, see CRS Insight IN11433, 1 For more information on SBA disaster loan funding, see CRS Insight IN11433, Supplemental Appropriations: SBA
Disaster Loan Account, by Bruce R. Lindsay et al. , by Bruce R. Lindsay et al.
2 P.L. 110-246 specifies that the amount provided to borrow “may not exceed” $2 million. 2 P.L. 110-246 specifies that the amount provided to borrow “may not exceed” $2 million.
3 Established in P.L. 110-246, Food, Conservation, and Energy Act of 2008. 3 Established in P.L. 110-246, Food, Conservation, and Energy Act of 2008.
4 15 U.S.C. §636. 4 15 U.S.C. §636.
Any business may be eligible for Major Source of Employment (MSE) status if, at the time the disaster commences, it Any business may be eligible for Major Source of Employment (MSE) status if, at the time the disaster commences, it
has one or more locations in the disaster area that, individually or in the aggregate, employed 10% or more of the entire has one or more locations in the disaster area that, individually or in the aggregate, employed 10% or more of the entire
work force within the commuting area of a geographically identifiable community, no larger than a county, provided work force within the commuting area of a geographically identifiable community, no larger than a county, provided
that the commuting area does not extend more than 50 miles from such community; or employed 5% or more of the that the commuting area does not extend more than 50 miles from such community; or employed 5% or more of the
work force in an industry within the disaster area and, if the concern is a nonmanufacturing concern, employed no work force in an industry within the disaster area and, if the concern is a nonmanufacturing concern, employed no
fewer than 50 employees in the disaster area or, if the concern is a manufacturing concern, employed no fewer than 150 fewer than 50 employees in the disaster area or, if the concern is a manufacturing concern, employed no fewer than 150
employees in the disaster area; or employed no fewer than 250 employees within the disaster area. In addition, the loan employees in the disaster area; or employed no fewer than 250 employees within the disaster area. In addition, the loan
applicant must have used all funds from its own resources and all available credit elsewhere to alleviate the physical applicant must have used all funds from its own resources and all available credit elsewhere to alleviate the physical
damage and/or economic injury sustained. Furthermore, SBA will consider a waiver of the legislative limit only to the damage and/or economic injury sustained. Furthermore, SBA will consider a waiver of the legislative limit only to the
extent that loan assistance in excess of $2,000,000 is necessary after the applicant, its affiliates, and its principals use extent that loan assistance in excess of $2,000,000 is necessary after the applicant, its affiliates, and its principals use
business and personal assets and credit to the greatest extent possible without incurring undue hardship. See U.S. Small business and personal assets and credit to the greatest extent possible without incurring undue hardship. See U.S. Small
Business Administration (SBA), Office of Disaster Assistance, “Disaster Assistance Program SOP 50 30 9,” pp. 105-Business Administration (SBA), Office of Disaster Assistance, “Disaster Assistance Program SOP 50 30 9,” pp. 105-
107, at https://www.sba.gov/document/sop-50-30-9-disaster-assistance-program. 107, at https://www.sba.gov/document/sop-50-30-9-disaster-assistance-program.
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applications for disaster loans exceeding $2 million (the largest was $2,226,800).5 A similar applications for disaster loans exceeding $2 million (the largest was $2,226,800).5 A similar
waiver authority is not provided for the individuals and households programs. waiver authority is not provided for the individuals and households programs.
It could be argued that the maximum loan amounts are outdated due to normal inflation and It could be argued that the maximum loan amounts are outdated due to normal inflation and
increased housing and construction costs. Further, the costs of housing items such as furniture, increased housing and construction costs. Further, the costs of housing items such as furniture,
appliances, and vehicles have increased since 1994. If this is the case, an SBA disaster loan may appliances, and vehicles have increased since 1994. If this is the case, an SBA disaster loan may
not be sufficient for some households and businesses to fully recover from a disaster. Others not be sufficient for some households and businesses to fully recover from a disaster. Others
could argue that disaster assistance—even in the form of a government loan—is intended to could argue that disaster assistance—even in the form of a government loan—is intended to
supplement, not replace, private insurance. As a result, it could be argued that increasing disaster supplement, not replace, private insurance. As a result, it could be argued that increasing disaster
loan limits would induce moral hazard (incentivizing individuals to purchase less insurance). Still loan limits would induce moral hazard (incentivizing individuals to purchase less insurance). Still
others might oppose increasing disaster loan limits for fiscal reasons, given that higher limits others might oppose increasing disaster loan limits for fiscal reasons, given that higher limits
would increase federal spending. would increase federal spending.
This report provides an overview of the historical developments of disaster loan limits, followed This report provides an overview of the historical developments of disaster loan limits, followed
by policy options related to disaster loan limits. To help contextualize disaster loan limits, this by policy options related to disaster loan limits. To help contextualize disaster loan limits, this
report includes narratives about inflation, construction costs, and median home values and prices. report includes narratives about inflation, construction costs, and median home values and prices.
A description of SBA disaster loan categories is located in tA description of SBA disaster loan categories is located in the Appendix of this report. of this report.
Historical Developments
SBA disaster loan limits were first introduced in 1957 through SBA notices published in the SBA disaster loan limits were first introduced in 1957 through SBA notices published in the
Federal Register and presented in SBA’s Administrative Manual. For example, on July 20, 1957, and presented in SBA’s Administrative Manual. For example, on July 20, 1957,
SBA announced that it would not provide disaster loans exceeding $100,000.6 Previously, the SBA announced that it would not provide disaster loans exceeding $100,000.6 Previously, the
disaster loan amount was determined on an individual basis, taking into account the disaster loan amount was determined on an individual basis, taking into account the
circumstances of the applicant and the disaster. A search of the circumstances of the applicant and the disaster. A search of the Federal Register indicates that indicates that
SBA limited disaster loans to no more than $350,000 in 1965.7 SBA limited disaster loans to no more than $350,000 in 1965.7
SBA disaster loan limits first appeared in the SBA disaster loan limits first appeared in the Code of Federal Regulations (C.F.R.) in 1968. Prior (C.F.R.) in 1968. Prior
to that, the C.F.R. indicated that “there is no statutory limitation on the amount of a disaster loan”8 to that, the C.F.R. indicated that “there is no statutory limitation on the amount of a disaster loan”8
and, as mentioned, SBA announced its disaster loan limits through notices published in the and, as mentioned, SBA announced its disaster loan limits through notices published in the
Federal Register. In this 1968 C.F.R. reference, SBA revised paragraph (a) of 13 C.F.R. §123.6, . In this 1968 C.F.R. reference, SBA revised paragraph (a) of 13 C.F.R. §123.6,
in part, by setting limits on business disaster loans at $100,000 for any one disaster (except for an in part, by setting limits on business disaster loans at $100,000 for any one disaster (except for an
additional amount to refinance any prior SBA disaster loan), personal property loans at $10,000, additional amount to refinance any prior SBA disaster loan), personal property loans at $10,000,
and real property loans at $20,000.9 In 1970, the SBA increased the limit for business disaster and real property loans at $20,000.9 In 1970, the SBA increased the limit for business disaster
loans to $500,000 and the limit for real property loans to $50,000. The SBA did not change the loans to $500,000 and the limit for real property loans to $50,000. The SBA did not change the
limit for personal property loans ($10,000).10 The SBA did not provide a rationale for establishing limit for personal property loans ($10,000).10 The SBA did not provide a rationale for establishing
the 1968 and 1970 disaster loan limits, or why those particular dollar amounts were selected. the 1968 and 1970 disaster loan limits, or why those particular dollar amounts were selected.

5 U.S. Small Business Administration (SBA), “Disaster Loan Data: Disaster Loan FY18,” https://data.sba.gov/dataset/5 U.S. Small Business Administration (SBA), “Disaster Loan Data: Disaster Loan FY18,” https://data.sba.gov/dataset/
disaster-loan-data. Not all approved disaster loan applicants accept the loan. disaster-loan-data. Not all approved disaster loan applicants accept the loan.
6 SBA, “Small Business Administration: Delegation Relating to Financial Assistance Including Disaster Loans, 6 SBA, “Small Business Administration: Delegation Relating to Financial Assistance Including Disaster Loans,
Procurement and Technical Assistance, and Administration,” 22Procurement and Technical Assistance, and Administration,” 22 Federal Register 5811, July 20, 1957. 5811, July 20, 1957.
7 SBA, “Small Business Administration: Delegation of Authority to Conduct Program Activities in the Regional 7 SBA, “Small Business Administration: Delegation of Authority to Conduct Program Activities in the Regional
Offices,” 30Offices,” 30 Federal Register 3340, March 11, 1965. 3340, March 11, 1965.
8 See for an example 13 C.F.R. §123.6, 1967 Edition. 8 See for an example 13 C.F.R. §123.6, 1967 Edition.
9 SBA, “Title 13—Business Credit and Assistance, Part 120—Loan Policy,” 33 9 SBA, “Title 13—Business Credit and Assistance, Part 120—Loan Policy,” 33 Federal Register 7622, May 23, 1968. 7622, May 23, 1968.
10 SBA, “Business Credit and Assistance, Part 120—Loan Policy,” 3510 SBA, “Business Credit and Assistance, Part 120—Loan Policy,” 35 Federal Register 16170, October 15, 1970. 16170, October 15, 1970.
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In 1980, disaster loan limits were first placed in statute (P.L. 96-302).11 Section 119(a) of P.L. 96- In 1980, disaster loan limits were first placed in statute (P.L. 96-302).11 Section 119(a) of P.L. 96-
302 amended Section 7(c) of the Small Business Act by adding a new paragraph: 302 amended Section 7(c) of the Small Business Act by adding a new paragraph:
Provided further, that no loan under subsection (b)(1) shall be made, either directly or in Provided further, that no loan under subsection (b)(1) shall be made, either directly or in
cooperation with banks or other lending institutions through agreements to participate on cooperation with banks or other lending institutions through agreements to participate on
an immediate or deferred basis, if the total amount outstanding and committed to the an immediate or deferred basis, if the total amount outstanding and committed to the
borrower under such subsection would exceed $500,000 for each disaster, unless an borrower under such subsection would exceed $500,000 for each disaster, unless an
applicant constitutes a major source of employment in an area suffering a disaster, in which applicant constitutes a major source of employment in an area suffering a disaster, in which
case the Administration, in its discretion, may waive the $500,000 limitation.12 case the Administration, in its discretion, may waive the $500,000 limitation.12
Congress did not provide a rationale for placing the limit in statute, or why $500,000 was selected Congress did not provide a rationale for placing the limit in statute, or why $500,000 was selected
as the limit.13 as the limit.13
It appears that businesses—not individuals and households—became eligible for the $500,000 It appears that businesses—not individuals and households—became eligible for the $500,000
limit established in P.L. 96-302. Instead, individuals and households continued to be eligible for limit established in P.L. 96-302. Instead, individuals and households continued to be eligible for
the maximum amount established in the 1970 revised federal regulation: $50,000 for real property the maximum amount established in the 1970 revised federal regulation: $50,000 for real property
disaster loans, and $10,000 for personal property loans.14 disaster loans, and $10,000 for personal property loans.14
Starting in the 1980s, SBA commonly made businesses eligible for the full amount established in Starting in the 1980s, SBA commonly made businesses eligible for the full amount established in
statute and individuals and households eligible for a lesser amount by regulation. The Small statute and individuals and households eligible for a lesser amount by regulation. The Small
Business Act authorizes SBA to set limits for home loans in regulation so long as they do not Business Act authorizes SBA to set limits for home loans in regulation so long as they do not
exceed limits established in statute by Congress. Under the Small Business Act, “no loan[s] ... exceed limits established in statute by Congress. Under the Small Business Act, “no loan[s] ...
shall be made ... [that] exceed $500,000.” Thus, home disaster loans remained capped at the shall be made ... [that] exceed $500,000.” Thus, home disaster loans remained capped at the
amount established in 1970 despite the statutory loan limit increase in 1980 (P.L. 96-302). amount established in 1970 despite the statutory loan limit increase in 1980 (P.L. 96-302).
In 1984, SBA increased the limits for real property disaster loans to $100,000 and personal In 1984, SBA increased the limits for real property disaster loans to $100,000 and personal
property loans to $20,000 in federal regulation. SBA disaster loan limits for business disaster property loans to $20,000 in federal regulation. SBA disaster loan limits for business disaster
loans remained at the maximum amount established in P.L. 96-302 ($500,000). loans remained at the maximum amount established in P.L. 96-302 ($500,000).
In 1993, without specific explanation, Congress tripled the limit on disaster loans in statute (P.L. In 1993, without specific explanation, Congress tripled the limit on disaster loans in statute (P.L.
103-75) from $500,000 to $1.5 million.15 103-75) from $500,000 to $1.5 million.15
Following the Northridge earthquake in California in 1994, SBA increased personal property Following the Northridge earthquake in California in 1994, SBA increased personal property
disaster loans from $20,000 to $40,000 and real property disaster loans from $100,000 to disaster loans from $20,000 to $40,000 and real property disaster loans from $100,000 to
$200,000 in regulation.16 According to SBA, the maximum loan amount was increased because $200,000 in regulation.16 According to SBA, the maximum loan amount was increased because
previous loan amounts were insufficient to meet the needs of “homeowners and renters previous loan amounts were insufficient to meet the needs of “homeowners and renters
confronted by the effects of physical disasters by virtue of the impact of economic inflation.”17 confronted by the effects of physical disasters by virtue of the impact of economic inflation.”17
SBA further stated that the previous maximum loan amounts were: SBA further stated that the previous maximum loan amounts were:
inadequate to compensate many disaster victims for the costs associated with rebuilding, inadequate to compensate many disaster victims for the costs associated with rebuilding,
replacing and repairing residential, real property and household effects such as clothing, replacing and repairing residential, real property and household effects such as clothing,

11 P.L. 96-302, An Act to Provide Authorizations for the Small Business Administration, and for Other Purposes. 11 P.L. 96-302, An Act to Provide Authorizations for the Small Business Administration, and for Other Purposes.
12 It is unclear if the SBA Administrator has ever waived the $500,000 limitation. CRS could not locate a waiver of this 12 It is unclear if the SBA Administrator has ever waived the $500,000 limitation. CRS could not locate a waiver of this
limitation. limitation.
13 Congress has not made distinctions between loan types each time it established limits. 13 Congress has not made distinctions between loan types each time it established limits.
14 SBA, “Business Credit and Assistance, Part 120—Loan Policy,” 35 14 SBA, “Business Credit and Assistance, Part 120—Loan Policy,” 35 Federal Register 16170, October 15, 1970. 16170, October 15, 1970.
15 P.L. 103-75, Emergency Supplemental Appropriations for Relief from the Major, Widespread Flooding in the 15 P.L. 103-75, Emergency Supplemental Appropriations for Relief from the Major, Widespread Flooding in the
Midwest Act of 1993. Midwest Act of 1993.
16 13 C.F.R. §123.105. According to a report by the University of California at Berkeley, repairs following the 16 13 C.F.R. §123.105. According to a report by the University of California at Berkeley, repairs following the
Northridge earthquake costed approximately $13 billion. See Kathleen Scalise, Northridge earthquake costed approximately $13 billion. See Kathleen Scalise, Damage Claims Skyrocket from
Northridge Earthquake, Finds New UC Berkeley Report, University of California at Berkeley, October 1, 1996, , University of California at Berkeley, October 1, 1996,
https://www.berkeley.edu/news/media/releases/96legacy/north.html. https://www.berkeley.edu/news/media/releases/96legacy/north.html.
17 SBA, “Disaster-Physical Disaster and Economic Injury Loans,” 59 17 SBA, “Disaster-Physical Disaster and Economic Injury Loans,” 59 Federal Register 6214, February 10, 1994. 6214, February 10, 1994.
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furniture and appliances which have been lost or damaged as a result of a physical disaster. furniture and appliances which have been lost or damaged as a result of a physical disaster.
Moreover, in the aftermath of disasters, especially large catastrophes, construction costs Moreover, in the aftermath of disasters, especially large catastrophes, construction costs
often increase sharply.18 often increase sharply.18
Generally, regulatory changes are made after issuing a public notice. However, in this instance, Generally, regulatory changes are made after issuing a public notice. However, in this instance,
SBA stated that the new maximum loan amount was established without public notice in an effort SBA stated that the new maximum loan amount was established without public notice in an effort
to meet immediate disaster loan demand caused by the earthquake. According to SBA, 13 C.F.R. to meet immediate disaster loan demand caused by the earthquake. According to SBA, 13 C.F.R.
§123.1(b): §123.1(b):
authorizes emergency changes in the regulations governing its disaster assistance program, authorizes emergency changes in the regulations governing its disaster assistance program,
and 5 U.S.C. 553(b)(B) which permits publication of regulations in final form without and 5 U.S.C. 553(b)(B) which permits publication of regulations in final form without
notice of comment when an agency finds that good cause exists for publication in final notice of comment when an agency finds that good cause exists for publication in final
form on an emergency basis, and that notice and comment is impracticable, unnecessary form on an emergency basis, and that notice and comment is impracticable, unnecessary
or contrary to the public interest. In this regard, the public interest in seeing to it that the or contrary to the public interest. In this regard, the public interest in seeing to it that the
new limitations are effective as to the recent California earthquake disaster makes the new limitations are effective as to the recent California earthquake disaster makes the
utilization of notice and comment rulemaking impracticable.19 utilization of notice and comment rulemaking impracticable.19
In 2008, Section 12078 of the Food, Conservation, and Energy Act of 2008 (P.L. 110-246) In 2008, Section 12078 of the Food, Conservation, and Energy Act of 2008 (P.L. 110-246)
amended the Small Business Act to make the disaster assistance program more accessible to amended the Small Business Act to make the disaster assistance program more accessible to
disaster victims, including by raising the statutory loan limit for disaster loans from $1.5 million disaster victims, including by raising the statutory loan limit for disaster loans from $1.5 million
to $2 million and authorizing the SBA Administrator to “increase the aggregate loan amount ... to $2 million and authorizing the SBA Administrator to “increase the aggregate loan amount ...
for loans relating to a disaster to a level established by the Administrator, based on appropriate for loans relating to a disaster to a level established by the Administrator, based on appropriate
economic indicators for the region in which that disaster occurred.’’20 While SBA revised the economic indicators for the region in which that disaster occurred.’’20 While SBA revised the
C.F.R. to make businesses eligible for the full amount, SBA did not revise disaster loan limits for C.F.R. to make businesses eligible for the full amount, SBA did not revise disaster loan limits for
home disaster loans in regulation. Consequently, the limits for home disaster loans are the same home disaster loans in regulation. Consequently, the limits for home disaster loans are the same
as those established in 1994 by regulation ($40,000 for personal property disaster loans and as those established in 1994 by regulation ($40,000 for personal property disaster loans and
$200,000 for real property disaster loans). Section 12078 of the Food, Conservation, and Energy $200,000 for real property disaster loans). Section 12078 of the Food, Conservation, and Energy
Act of 2008 was the most recent adjustment to disaster loan limits in statutAct of 2008 was the most recent adjustment to disaster loan limits in statute. Figure 1 provides a provides a
list of regulatory and legislative disaster loan limit developments. list of regulatory and legislative disaster loan limit developments.
In May 2020, SBA lowered the maximum loan amount for Economic Injury Disaster Loans In May 2020, SBA lowered the maximum loan amount for Economic Injury Disaster Loans
(EIDL) for Coronavirus Disease 2019 (COVID-19) relief to $150,000 due to unprecedented (EIDL) for Coronavirus Disease 2019 (COVID-19) relief to $150,000 due to unprecedented
demand for limited loan resources.21 The maximum loan amount was raised again as the SBA demand for limited loan resources.21 The maximum loan amount was raised again as the SBA
Disaster Loan Account was replenished with supplemental funding (see Disaster Loan Account was replenished with supplemental funding (see Table 2)1). In March 2021, . In March 2021,
SBA announced an increase in the maximum amount for COVID-19 EIDL relief from $150,000 SBA announced an increase in the maximum amount for COVID-19 EIDL relief from $150,000
to $500,000.22 In September 2021, SBA raised the maximum amount to $2 million.23 to $500,000.22 In September 2021, SBA raised the maximum amount to $2 million.23

18 Ibid. 18 Ibid.
19 Ibid. 19 Ibid.
20 A search of government documents including hearings, bill reports, and notices in the 20 A search of government documents including hearings, bill reports, and notices in the Federal Register failed to failed to
identify instances of the SBA Administrator increasing the aggregate amount based on economic indicators. Nor did it identify instances of the SBA Administrator increasing the aggregate amount based on economic indicators. Nor did it
identify the rationale for why the statutory loan limit was increased to $2 million, or why that particular amount was identify the rationale for why the statutory loan limit was increased to $2 million, or why that particular amount was
selected. selected.
21 SBA, Office of Inspector General, 21 SBA, Office of Inspector General, Inspection of the Small Business Administration’s Initial Response to the
Coronavirus Pandemic, October 28, 2020, p. 10, https://www.sba.gov/sites/default/files/2020-10/SBA OIG Report 21-, October 28, 2020, p. 10, https://www.sba.gov/sites/default/files/2020-10/SBA OIG Report 21-
02.pdf02.pdf~~#page=15~~. According to the report, SBA “approved and disbursed more loans for COVID-19 relief than for all . According to the report, SBA “approved and disbursed more loans for COVID-19 relief than for all
other disasters combined in the agency’s history.” See page 3 of the report.other disasters combined in the agency’s history.” See page 3 of the report.
22 SBA, 22 SBA, SBA to Increase Lending Limit for COVID-19 Economic Injury Disaster Loans, March 24, 2021, , March 24, 2021,
https://www.sba.gov/article/2021/mar/24/sba-increase-lending-limit-covid-19-economic-injury-disaster-loans. https://www.sba.gov/article/2021/mar/24/sba-increase-lending-limit-covid-19-economic-injury-disaster-loans.
23 SBA, SBA Administrator Guzman Enhances COVID Economic Injury Disaster Loan Program to Aid Small 23 SBA, SBA Administrator Guzman Enhances COVID Economic Injury Disaster Loan Program to Aid Small
Businesses Facing Challenges from Delta Variant, September 9, 2021, https://www.sba.gov/article/2021/sep/09/sba-Businesses Facing Challenges from Delta Variant, September 9, 2021, https://www.sba.gov/article/2021/sep/09/sba-
administrator-guzman-enhances-covid-economic-injury-disaster-loan-program-aid-small-businesses. administrator-guzman-enhances-covid-economic-injury-disaster-loan-program-aid-small-businesses.
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Figure 1. Regulatory and Statutory History of Disaster Loan Limits

Source: Based on CRS interpretation of regulatory and statutory adjustments to disaster loan limits. Based on CRS interpretation of regulatory and statutory adjustments to disaster loan limits.
Table 1. Supplemental Appropriations: SBA Disaster Loan Account
FY2020-FY2022 FY2020-FY2022
Public Law Number, Division, and
Bill Title
Appropriation
Purpose
FY2020
P.L. 116-123, Division A P.L. 116-123, Division A
$20,000,000 $20,000,000
P.L. 116-123 appropriated $20 mil ion to P.L. 116-123 appropriated $20 mil ion to
Coronavirus Preparedness and Response Coronavirus Preparedness and Response
carry out administrative expenses carry out administrative expenses
Supplemental Appropriations Act, 2020 Supplemental Appropriations Act, 2020
associated with the SBA Disaster Loan associated with the SBA Disaster Loan
Program. Program.
P.L. 116-136, Division B P.L. 116-136, Division B
$10,562,000,000 $10,562,000,000
P.L. 116-136 appropriated $10 bil ion for P.L. 116-136 appropriated $10 bil ion for
CARES Act CARES Act
Emergency EIDL Grants and $562 mil ion Emergency EIDL Grants and $562 mil ion
to support EIDL. to support EIDL.
P.L. 116-139, Division B P.L. 116-139, Division B
$60,000,000,000 $60,000,000,000
P.L. 116-139 appropriated $10 bil ion for P.L. 116-139 appropriated $10 bil ion for
Paycheck Protection Program and Health Paycheck Protection Program and Health
Emergency EIDL Grants, and $50 bil ion to Emergency EIDL Grants, and $50 bil ion to
Care Enhancement Act Care Enhancement Act
support EIDL. support EIDL.
FY2021
P.L. 116-260, Division P.L. 116-260, Division Na Na
$20,000,000,000 $20,000,000,000
P.L. 116-260 appropriated $20 bil ion for P.L. 116-260 appropriated $20 bil ion for
Economic Aid to Hard-Hit Small Economic Aid to Hard-Hit Small
Targeted EIDL Grants, of which Targeted EIDL Grants, of which
Businesses, Nonprofits, and Venues Act Businesses, Nonprofits, and Venues Act
$20,000,000 shall be made available to the $20,000,000 shall be made available to the
Inspector General of the Small Business Inspector General of the Small Business
Administration to prevent waste, fraud, and Administration to prevent waste, fraud, and
abuse. abuse.
P.L. 117-2 P.L. 117-2
$15,460,000,000 $15,460,000,000
P.L. 117-2 appropriated $10 bil ion for P.L. 117-2 appropriated $10 bil ion for
American Rescue Plan Act of 2021 American Rescue Plan Act of 2021
Targeted EIDL Advance Grants; $5 bil ion Targeted EIDL Advance Grants; $5 bil ion
for Emergency EIDL Grants; and $460 for Emergency EIDL Grants; and $460
mil ion for the disaster loan account, of mil ion for the disaster loan account, of
which $70 mil ion was for disaster loan which $70 mil ion was for disaster loan
credit subsidies and $390 mil ion was for credit subsidies and $390 mil ion was for
disaster loan administrative expenses. disaster loan administrative expenses.
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Public Law Number, Division, and
Bill Title
Appropriation
Purpose
~~FY2022b~~FY2022b
P.L. 117-43, Division B P.L. 117-43, Division B
$1,189,100,000 $1,189,100,000
P.L. 117-43 appropriated $1.1891 bil ion for P.L. 117-43 appropriated $1.1891 bil ion for
Extending Government Funding and Extending Government Funding and
the disaster loan account. Up to $620 the disaster loan account. Up to $620
Delivering Emergency Assistance Act Delivering Emergency Assistance Act
mil ion may be transferred to and merged mil ion may be transferred to and merged
with “Salaries and Expenses” for with “Salaries and Expenses” for
administrative expenses to carry out the administrative expenses to carry out the
disaster loan program. disaster loan program.
Source: Based on appropriations laws. Based on appropriations laws.
Note: EIDL refers to economic injury disaster loan. EIDL refers to economic injury disaster loan.
a. P.L. 116-260. Division E, the Financial Services and General Government Appropriations Act, 2021, also a. P.L. 116-260. Division E, the Financial Services and General Government Appropriations Act, 2021, also
appropriated $168,075,000 for FY2021 regular appropriations to the SBA disaster loan program account. appropriated $168,075,000 for FY2021 regular appropriations to the SBA disaster loan program account.
b. P.L. 117-58, the Infrastructure Investment and Jobs Act, rescinded $36.929 bil ion in SBA unobligated b. P.L. 117-58, the Infrastructure Investment and Jobs Act, rescinded $36.929 bil ion in SBA unobligated
balances, including $17.578 bil ion from funds provided by P.L. 116-260 for the Targeted EIDL Advance balances, including $17.578 bil ion from funds provided by P.L. 116-260 for the Targeted EIDL Advance
grant program; and $13.5 bil ion from funds provided by P.L. 116-139 for the Disaster Loans Program grant program; and $13.5 bil ion from funds provided by P.L. 116-139 for the Disaster Loans Program
Account for EIDL loan credit subsidies. Account for EIDL loan credit subsidies.
Contextualizing SBA Disaster Loan Limits
One challenging aspect of establishing disaster loan limits is the lack of consensus on a model or One challenging aspect of establishing disaster loan limits is the lack of consensus on a model or
formula for determining disaster recovery rebuilding and repair costs. Establishing an appropriate formula for determining disaster recovery rebuilding and repair costs. Establishing an appropriate
disaster loan limit is difficult for a variety of reasons, including (1) demolition, labor, disaster loan limit is difficult for a variety of reasons, including (1) demolition, labor,
construction, and material costs vary by region and fluctuate over time; (2) variation between construction, and material costs vary by region and fluctuate over time; (2) variation between
states and regions with respect to median home costs and prices, building permits, and codes; and states and regions with respect to median home costs and prices, building permits, and codes; and
(3) “normal” reconstruction costs may be of limited value to establish disaster reconstruction (3) “normal” reconstruction costs may be of limited value to establish disaster reconstruction
costs because disasters can deplete labor and/or material in an area, which may lead to increased costs because disasters can deplete labor and/or material in an area, which may lead to increased
labor and material costs. labor and material costs.
An additional consideration associated with developing disaster loan limits is whether the current An additional consideration associated with developing disaster loan limits is whether the current
loan limits are restrictive to individuals and households residing in areas with higher property loan limits are restrictive to individuals and households residing in areas with higher property
prices and values. prices and values.
The following sections help frame these issues by examining a range of factors Congress might The following sections help frame these issues by examining a range of factors Congress might
consider in evaluating disaster loan limits. consider in evaluating disaster loan limits.
Inflation
Inflation, or the general rise in prices of goods and services in the economy, is an important Inflation, or the general rise in prices of goods and services in the economy, is an important
indicator of purchasing power over time or the value of a dollar. One tool used to measure indicator of purchasing power over time or the value of a dollar. One tool used to measure
inflation, the Consumer Price Index (CPI), covers prices for consumer goods and services inflation, the Consumer Price Index (CPI), covers prices for consumer goods and services
typically purchased by households, and is often used to adjust household incomes for inflation. typically purchased by households, and is often used to adjust household incomes for inflation.
The graph i The graph in Figure 2 shows the CPI from 1994, when personal and real property disaster loan shows the CPI from 1994, when personal and real property disaster loan
limits were last updated, to 2021. The CPI grew from about 148 in 1994 to just over 270 in 2021 limits were last updated, to 2021. The CPI grew from about 148 in 1994 to just over 270 in 2021
(note that the values fluctuate from month to month), which can be expressed as a growth rate of (note that the values fluctuate from month to month), which can be expressed as a growth rate of
82%. In 2008, when the business disaster loan limit was last revised, the CPI was 215, 82%. In 2008, when the business disaster loan limit was last revised, the CPI was 215,
representing 26% growth from 2008 to 2021. representing 26% growth from 2008 to 2021.
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Figure 2. Consumer Price Index Change
1994-2021 1994-2021

Source: U.S.U.S. Bureau of Labor Statistics, Consumer Price Index for All Urban Consumers, https://www.bls.gov/Bureau of Labor Statistics, Consumer Price Index for All Urban Consumers, https://www.bls.gov/
news.release/cpi.t01.htm; historical data accessed through U.S. Department of Agriculture (USDA), news.release/cpi.t01.htm; historical data accessed through U.S. Department of Agriculture (USDA),
https://www.nrcs.usda.gov/wps/portal/nrcs/main/national/technical/econ/prices/. https://www.nrcs.usda.gov/wps/portal/nrcs/main/national/technical/econ/prices/.
Notes: Data represent annual averages of monthly values. Data represent annual averages of monthly values.
Construction Costs
The graph below The graph below (Figure 3) shows how construction costs have risen since 1994, based on a shows how construction costs have risen since 1994, based on a
well-known construction cost index (CCI) used by the construction industry to estimate project well-known construction cost index (CCI) used by the construction industry to estimate project
costs and prepare bids. The index takes into account the costs of both construction materials and costs and prepare bids. The index takes into account the costs of both construction materials and
labor, which vary by market (geographic area) and type of construction (e.g., commercial or labor, which vary by market (geographic area) and type of construction (e.g., commercial or
residential building; wood-frame or steel-frame structure).24 residential building; wood-frame or steel-frame structure).24
According to the index, construction cost increases began to accelerate in 2004, with the largest According to the index, construction cost increases began to accelerate in 2004, with the largest
year-to-year increases occurring during the years leading up to the 2008 financial crisis. From year-to-year increases occurring during the years leading up to the 2008 financial crisis. From
1994 to 2021, the CCI grew by 120%, and from 2008 to 2021, it grew by 44%. 1994 to 2021, the CCI grew by 120%, and from 2008 to 2021, it grew by 44%.

24 The CCI is published by the Engineering News-Record and is based on data from 20 cities, including the following: 24 The CCI is published by the Engineering News-Record and is based on data from 20 cities, including the following:
Atlanta, GA; Baltimore, MD; Birmingham, AL; Boston, MA; Chicago, IL; Cincinnati, OH; Cleveland, OH; Dallas, Atlanta, GA; Baltimore, MD; Birmingham, AL; Boston, MA; Chicago, IL; Cincinnati, OH; Cleveland, OH; Dallas,
TX; Denver, CO; Detroit, MI; Kansas City, MO; Los Angeles, CA; Minneapolis, MN; New Orleans, LA; New York, TX; Denver, CO; Detroit, MI; Kansas City, MO; Los Angeles, CA; Minneapolis, MN; New Orleans, LA; New York,
NY; Philadelphia, PA; Pittsburgh, PA; San Francisco, CA; Seattle, WA; St. Louis, MO. NY; Philadelphia, PA; Pittsburgh, PA; San Francisco, CA; Seattle, WA; St. Louis, MO.
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SBA Disaster Loan Limits: Policy Options and Considerations

Figure 3. U.S. Construction Cost Change
1994-2021 1994-2021

Source: Engineering News-Record (ENR), Construction Cost Index History, https://www.enr.com/economics/ Engineering News-Record (ENR), Construction Cost Index History, https://www.enr.com/economics/
historical_indices; originally accessed through U.S. Department of Agriculture (USDA), historical_indices; originally accessed through U.S. Department of Agriculture (USDA),
https://www.nrcs.usda.gov/wps/portal/nrcs/main/national/technical/econ/prices/. https://www.nrcs.usda.gov/wps/portal/nrcs/main/national/technical/econ/prices/.
Notes: Data represent annual averages of monthly values. Data represent annual averages of monthly values.
The data provided i The data provided in Figure 3 may not be analogous to reconstruction costs after a disaster. As may not be analogous to reconstruction costs after a disaster. As
mentioned, disasters potentially stress the availability of labor, local resources, and materials mentioned, disasters potentially stress the availability of labor, local resources, and materials
which may increase reconstruction costs after a disaster takes place. which may increase reconstruction costs after a disaster takes place.
The graph i The graph in Figure 4 plots the CPI along with the CCI, to show the difference between the rise plots the CPI along with the CCI, to show the difference between the rise
of the cost of a general basket of goods and services and construction costs. In 2013, the CCI of the cost of a general basket of goods and services and construction costs. In 2013, the CCI
eclipsed the CPI and has remained higher. eclipsed the CPI and has remained higher.
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SBA Disaster Loan Limits: Policy Options and Considerations

Figure 4. Consumer Price and Construction Cost Comparison
1994-2021 1994-2021

Source: Bureau of Labor Statistics, Consumer Price Index for All Urban Consumers, https://www.bls.gov/Bureau of Labor Statistics, Consumer Price Index for All Urban Consumers, https://www.bls.gov/
news.release/cpi.t01.htm; historical data accessed through U.S. Department of Agriculture (USDA); Engineering news.release/cpi.t01.htm; historical data accessed through U.S. Department of Agriculture (USDA); Engineering
News-Record (ENR), Construction Cost Index History, https://www.enr.com/economics/historical_indices. News-Record (ENR), Construction Cost Index History, https://www.enr.com/economics/historical_indices.
Notes: Data represent annual averages of monthly values. Data represent annual averages of monthly values.
Median Home Prices and Values
The following sections examine home prices and values, including how they have changed over The following sections examine home prices and values, including how they have changed over
time. time.
Home Prices
The Federal Reserve Bank of St. Louis indicates that the median sales price for a used home in The Federal Reserve Bank of St. Louis indicates that the median sales price for a used home in
the United States was $130,000 in 1994. Since then, median home sales prices have steadily the United States was $130,000 in 1994. Since then, median home sales prices have steadily
increased, exceeding $200,000 in 2004 (at $212,700) and reaching $428,700 in 2022 (seeincreased, exceeding $200,000 in 2004 (at $212,700) and reaching $428,700 in 2022 (see Figure
5).
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Figure 5. Median Sales Price for used Homes in the United States
1994-2022 1994-2022

Source: Derived from Federal Reserve Bank of St. Louis, Derived from Federal Reserve Bank of St. Louis, Median Sales Price of Houses Sold for the United States, ,
https://fred.stlouisfed.org/series/MSPUS#0. https://fred.stlouisfed.org/series/MSPUS#0.
Note: The current SBA Real Property Disaster Loan limit is $200,000. The current SBA Real Property Disaster Loan limit is $200,000.
Home Values
Some datasets assess homes by value rather than price. Value is generally considered what homes Some datasets assess homes by value rather than price. Value is generally considered what homes
with similar features and in similar condition might be sold for in a given area. Based on U.S. with similar features and in similar condition might be sold for in a given area. Based on U.S.
Census Bureau data, the median home value in 2020 was $251,700. Roughly half of homes in the Census Bureau data, the median home value in 2020 was $251,700. Roughly half of homes in the
United States (including Washington, DC) had values above the $200,000 range (seUnited States (including Washington, DC) had values above the $200,000 range (see Figure 6). .
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Figure 6. Financial Characteristics for Housing Units with a Mortgage, 2020
Median Home Values Median Home Values

Source: U.S. Census Bureau, S2506, U.S. Census Bureau, S2506, Financial Characteristics for Housing Units with a Mortgage, 2020, , 2020,
https://data.census.gov/cedsci/map?q=S2506&g=0100000US%240400000&tid=ACSST5Y2020.S2506&cid=https://data.census.gov/cedsci/map?q=S2506&g=0100000US%240400000&tid=ACSST5Y2020.S2506&cid=
S2506_C01_001E&layer=VT_2020_040_00_PP_D1&mode=thematic&loc=44.8284,-114.5317,z3.2393. S2506_C01_001E&layer=VT_2020_040_00_PP_D1&mode=thematic&loc=44.8284,-114.5317,z3.2393.
Some may object to the use of home prices and values to determine appropriate home disaster Some may object to the use of home prices and values to determine appropriate home disaster
loan limits. Home sale prices, they might argue, cannot be compared to repair and rebuilding loan limits. Home sale prices, they might argue, cannot be compared to repair and rebuilding
costs. For one, not all home disaster loans are for completely destroyed homes. Rather, most are costs. For one, not all home disaster loans are for completely destroyed homes. Rather, most are
for making structural repairs (such as replacing a roof). Similarly, some may question the use of for making structural repairs (such as replacing a roof). Similarly, some may question the use of
median home values as a tool for determining loan caps. Homes in California and Washington, median home values as a tool for determining loan caps. Homes in California and Washington,
DC, for example, have higher values, in part, because of their location. According to this line of DC, for example, have higher values, in part, because of their location. According to this line of
thinking, property values remain high in those areas even if the homes are destroyed. Disaster thinking, property values remain high in those areas even if the homes are destroyed. Disaster
loans, it could be argued, should be used to repair and replace the structure, not replace the loans, it could be argued, should be used to repair and replace the structure, not replace the
property. It could be further argued that people living in high-cost areas have higher incomes and property. It could be further argued that people living in high-cost areas have higher incomes and
thus are more capable of purchasing insurance. thus are more capable of purchasing insurance.
Others might argue that federal disaster assistance is intended to supplement, not replace private Others might argue that federal disaster assistance is intended to supplement, not replace private
insurance. It could be further argued that increasing disaster loan limits induces moral hazard if insurance. It could be further argued that increasing disaster loan limits induces moral hazard if
homeowners believe the limit is high enough to make them whole again after the incident. If that homeowners believe the limit is high enough to make them whole again after the incident. If that
is the case, some homeowners may decide not to not to insure (or decide to underinsure) their is the case, some homeowners may decide not to not to insure (or decide to underinsure) their
property.25 property.25

25 For example, according to the Senate Task Force on Funding Disaster Relief “after the Midwest flood of 1993, the 25 For example, according to the Senate Task Force on Funding Disaster Relief “after the Midwest flood of 1993, the
Interagency Floodplain Management Review Committee reported that ... [the] provision of ... federal disaster assistance Interagency Floodplain Management Review Committee reported that ... [the] provision of ... federal disaster assistance
to those without insurance [created the] perception with many floodplain residents that purchase of flood insurance is to those without insurance [created the] perception with many floodplain residents that purchase of flood insurance is
not a worthwhile investment.” There is, however, some debate on the topic of insurance. The Senate Task Force on not a worthwhile investment.” There is, however, some debate on the topic of insurance. The Senate Task Force on
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Variations in State and County Home Costs
Throughout the United States, there are counties that have median home costs that are Throughout the United States, there are counties that have median home costs that are
significantly higher than the rest of the nation. For example, a major disaster declaration issued significantly higher than the rest of the nation. For example, a major disaster declaration issued
for the Camp Fire in California made home disaster loans available to individuals and households for the Camp Fire in California made home disaster loans available to individuals and households
residing in Butte, Los Angeles, and Ventura counties.26 The median home sale prices for those residing in Butte, Los Angeles, and Ventura counties.26 The median home sale prices for those
counties in 2020 were well above the national median at $304,700, $615,500, and $609,200 counties in 2020 were well above the national median at $304,700, $615,500, and $609,200
respectively.27 In another example, in some Florida counties with a history of hurricane respectively.27 In another example, in some Florida counties with a history of hurricane
damages—Collier and Monroe counties—also have median sales prices well above the national damages—Collier and Monroe counties—also have median sales prices well above the national
median ($366,600 and $588,100 in 2020, respectively).28 median ($366,600 and $588,100 in 2020, respectively).28
Personal Property, Home Furnishings, and Vehicles
SBA Personal Property Loans provide creditworthy homeowners or renters located in a declared SBA Personal Property Loans provide creditworthy homeowners or renters located in a declared
disaster area with up to $40,000 to repair or replace personal property owned by the survivor. disaster area with up to $40,000 to repair or replace personal property owned by the survivor.
Personal Property may include furniture, clothing, and vehicles. The $40,000 limit for SBA Personal Property may include furniture, clothing, and vehicles. The $40,000 limit for SBA
Personal Property Loans was last adjusted in regulation in 1994. Personal Property Loans was last adjusted in regulation in 1994.
According to economic data published by the Federal Reserve Bank of St. Louis, from 2010 to According to economic data published by the Federal Reserve Bank of St. Louis, from 2010 to
2022, prices for household furnishings and supplies increased 4.2% (see2022, prices for household furnishings and supplies increased 4.2% (see Figure 7).29 From 1994 29 From 1994
to 2022 new vehicle prices increased 26.78%, and used cars and trucks increased 54.14% (see to 2022 new vehicle prices increased 26.78%, and used cars and trucks increased 54.14% (see
Figure 8). The data may suggest to some that the $40,000 disaster loan limit may not presently be . The data may suggest to some that the $40,000 disaster loan limit may not presently be
sufficient to replace vehicles, home furnishings, and supplies. Others may disagree and argue that, sufficient to replace vehicles, home furnishings, and supplies. Others may disagree and argue that,
while some household costs have increased, others have decreased. According to the Federal while some household costs have increased, others have decreased. According to the Federal
Reserve Bank of St. Louis: Reserve Bank of St. Louis:
It is natural to complain that some prices increase. But ... prices can also decrease. While It is natural to complain that some prices increase. But ... prices can also decrease. While
there are obvious seasonal fluctuations for some goods (say, agricultural products), other there are obvious seasonal fluctuations for some goods (say, agricultural products), other
goods have been declining year over year, contributing to a general price inflation that is goods have been declining year over year, contributing to a general price inflation that is
lower than one may think. [A] prime example is anything related to information lower than one may think. [A] prime example is anything related to information
technology.... IT devices with a given set of characteristics have continuously fallen in technology.... IT devices with a given set of characteristics have continuously fallen in
price. Or, to put it differently, a device of the same price year after year will provide much price. Or, to put it differently, a device of the same price year after year will provide much
better performance; its price by “unit of performance” must therefore be declining.30 better performance; its price by “unit of performance” must therefore be declining.30

Funding Disaster Relief also stated that “at least one study concluded that expecting ... federal disaster assistance did Funding Disaster Relief also stated that “at least one study concluded that expecting ... federal disaster assistance did
not significantly influence individuals’ decisions about purchasing flood insurance.” U.S. Congress, Senate, not significantly influence individuals’ decisions about purchasing flood insurance.” U.S. Congress, Senate, Federal
Disaster Assistance, Report of the Senate Task Force on Funding Disaster Relief, 104th Cong., March 15, 104-4 , Report of the Senate Task Force on Funding Disaster Relief, 104th Cong., March 15, 104-4
(Washington: GPO, 1995), p. 64. (Washington: GPO, 1995), p. 64.
26 Federal Emergency Management Agency, 26 Federal Emergency Management Agency, California Wildfires (DR-4407), November 30, 2018, , November 30, 2018,
https://www.fema.gov/disaster/4407. https://www.fema.gov/disaster/4407.
27 27 ~~United States~~U.S. Census Bureau, Quick Facts, https://www.census.gov/quickfacts/fact/table/ Census Bureau, Quick Facts, https://www.census.gov/quickfacts/fact/table/
venturacountycalifornia,losangelescountycalifornia,buttecountycalifornia/PST120221. venturacountycalifornia,losangelescountycalifornia,buttecountycalifornia/PST120221.
28 28 ~~United States~~U.S. Census Bureau, Quick Facts, https://www.census.gov/quickfacts/fact/table/colliercountyflorida/ Census Bureau, Quick Facts, https://www.census.gov/quickfacts/fact/table/colliercountyflorida/
PST045221, and https://www.census.gov/quickfacts/fact/table/monroecountyflorida/PST045221. PST045221, and https://www.census.gov/quickfacts/fact/table/monroecountyflorida/PST045221.
29 Authoritative data on household furnishings and supplies from 1994 to 2010 could not be located. 29 Authoritative data on household furnishings and supplies from 1994 to 2010 could not be located.
30 Federal Reserve Bank of St. Louis, 30 Federal Reserve Bank of St. Louis, Not All Prices Increase, October 2, 2014, https://fredblog.stlouisfed.org/2014/10/, October 2, 2014, https://fredblog.stlouisfed.org/2014/10/
not-all-prices-increase/. not-all-prices-increase/.
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Figure 7. Consumer Price Index for All Urban Consumers: Household Furnishings
and Supplies in the United States

Source: Federal Reserve Bank of St. Louis, Federal Reserve Bank of St. Louis, Consumer Price Index for All Urban Consumers: Household Furnishings
and Supplies in U.S. City Average, July 13, 2022, https://fred.stlouisfed.org/series/CUUS0000SAH31. , July 13, 2022, https://fred.stlouisfed.org/series/CUUS0000SAH31.
Figure 8. Consumer Price Index for All Urban Consumers: New Vehicles;
Used Cars and Trucks in the United States

Source: Federal Reserve Bank of St. Louis, Federal Reserve Bank of St. Louis, Consumer Price Index for All Urban Consumers: Used Cars and Trucks in
U.S. City Average, July 2022, https://fred.stlouisfed.org/series/CUSR0000SETA02; and Federal Reserve Bank of St. , July 2022, https://fred.stlouisfed.org/series/CUSR0000SETA02; and Federal Reserve Bank of St.
Louis, Louis, Consumer Price Index for All Urban Consumers: New Vehicles in U.S. City Average, July 2022, , July 2022,
https://fred.stlouisfed.org/series/CUUR0000SETA01. https://fred.stlouisfed.org/series/CUUR0000SETA01.
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Policy Options
The following sections describe policy options that Congress may consider when contemplating The following sections describe policy options that Congress may consider when contemplating
disaster limits, including formulas and the establishment of disaster limit floors. disaster limits, including formulas and the establishment of disaster limit floors.
Disaster Limit Waivers
As mentioned previously, P.L. 110-246 authorized SBA to waive the $2 million loan limit for As mentioned previously, P.L. 110-246 authorized SBA to waive the $2 million loan limit for
business disaster loans and provide a higher loan amount under specified circumstances. business disaster loans and provide a higher loan amount under specified circumstances.
Congress could consider a similar waiver for disaster home loans. For example, SBA could waive Congress could consider a similar waiver for disaster home loans. For example, SBA could waive
the limit for home disaster loans if the region, or nature of the disaster’s circumstances, make a the limit for home disaster loans if the region, or nature of the disaster’s circumstances, make a
full recovery cost prohibitive. full recovery cost prohibitive.
Disaster Loan Limit Formulas
Rather than periodically adjusting disaster loan limits, Congress could require SBA to set disaster Rather than periodically adjusting disaster loan limits, Congress could require SBA to set disaster
loan limits by formula, incorporating measures such as inflation, economic indicators, and/or loan limits by formula, incorporating measures such as inflation, economic indicators, and/or
home values and prices. SBA applies a similar formula-based model to determine disaster loan home values and prices. SBA applies a similar formula-based model to determine disaster loan
interest rates for individuals and households that are unable to secure a disaster loan through a interest rates for individuals and households that are unable to secure a disaster loan through a
private lender: private lender:
the rate prescribed by the [SBA] Administration but not more than one-half the rate the rate prescribed by the [SBA] Administration but not more than one-half the rate
determined by the Secretary of the Treasury taking into consideration the current average determined by the Secretary of the Treasury taking into consideration the current average
market yield on outstanding marketable obligations of the United States with remaining market yield on outstanding marketable obligations of the United States with remaining
periods to maturity comparable to the average maturities of such loan plus an additional periods to maturity comparable to the average maturities of such loan plus an additional
charge of not to exceed 1 per centum per annum as determined by the Administrator, and charge of not to exceed 1 per centum per annum as determined by the Administrator, and
adjusted to the nearest one-eighth of 1 per centum, but not to exceed 4 per centum per adjusted to the nearest one-eighth of 1 per centum, but not to exceed 4 per centum per
annum.31 annum.31
A disaster loan limit formula could be applied nationwide, or regionally for areas with higher A disaster loan limit formula could be applied nationwide, or regionally for areas with higher
housing costs. housing costs.
Disaster Loan Limit Floors
As described in As described in “Historical Developments,” SBA lowered disaster limits for COVID-19 EIDL SBA lowered disaster limits for COVID-19 EIDL
assistance in 2020 from $2 million per loan to $150,000 to meet COVID-19 EIDL demand. assistance in 2020 from $2 million per loan to $150,000 to meet COVID-19 EIDL demand.
According to the SBA Office of Inspector General, SBA “approved and disbursed more loans for According to the SBA Office of Inspector General, SBA “approved and disbursed more loans for
COVID-19 relief than for all other disasters combined in the agency’s history.”32 As mentioned COVID-19 relief than for all other disasters combined in the agency’s history.”32 As mentioned
previously, the Small Business Act authorizes SBA to set disaster loan limits so long as they do previously, the Small Business Act authorizes SBA to set disaster loan limits so long as they do
not exceed the loan limits established in statute. The absence of a statutory floor allowed SBA to not exceed the loan limits established in statute. The absence of a statutory floor allowed SBA to
temporarily reduce the loan limit so that it could continue to provide COVID-19 EIDL assistance temporarily reduce the loan limit so that it could continue to provide COVID-19 EIDL assistance
to struggling businesses. While the SBA’s decision to lower loan limits may have helped the to struggling businesses. While the SBA’s decision to lower loan limits may have helped the
agency meet high levels of demand, some were concerned the amount was insufficient to meet agency meet high levels of demand, some were concerned the amount was insufficient to meet
the economic recovery needs of businesses.33 the economic recovery needs of businesses.33

31 15 U.S.C. §636(d)(5)(A). 31 15 U.S.C. §636(d)(5)(A).
32 SBA, Office of Inspector General, 32 SBA, Office of Inspector General, Inspection of the Small Business Administration’s Initial Response to the
Coronavirus Pandemic, October 28, 2020, p. 3, https://www.sba.gov/sites/default/files/2020-10/SBA OIG Report 21-, October 28, 2020, p. 3, https://www.sba.gov/sites/default/files/2020-10/SBA OIG Report 21-
02.pdf02.pdf~~#page=15~~. .
33 For example, see 33 For example, see Cardin, Schumer & Shaheen Call on SBA to Reverse Policy That Limits Economic Disaster Loan
Program (EIDL) Loans to $150k, https://www.sbc.senate.gov/public/index.cfm/2020/5/cardin-schumer-shaheen-call-, https://www.sbc.senate.gov/public/index.cfm/2020/5/cardin-schumer-shaheen-call-
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It may be argued that the factors that led to SBA’s decision to lower the loan limit were It may be argued that the factors that led to SBA’s decision to lower the loan limit were
extraordinary and unprecedented. Historically SBA has never had to lower limits to meet loan extraordinary and unprecedented. Historically SBA has never had to lower limits to meet loan
demand for natural disasters such as hurricanes or floods. Still, there may now be some concern demand for natural disasters such as hurricanes or floods. Still, there may now be some concern
that SBA might reduce loan limits in the future if the SBA Disaster Loan Account runs low on that SBA might reduce loan limits in the future if the SBA Disaster Loan Account runs low on
funding.34 If so, some homeowners and/or businesses may not be able to make a full recovery funding.34 If so, some homeowners and/or businesses may not be able to make a full recovery
from the incident. Against this concern it might be argued that SBA should be allowed to lower from the incident. Against this concern it might be argued that SBA should be allowed to lower
loan limits to meet loan demand if needed. According to this line of thought, the lower limit loan limits to meet loan demand if needed. According to this line of thought, the lower limit
would allow SBA to provide as many disaster loans as possible, which is seen as better than would allow SBA to provide as many disaster loans as possible, which is seen as better than
denying loan applications on the basis of inadequate funding. To summarize, on the one hand, denying loan applications on the basis of inadequate funding. To summarize, on the one hand,
establishing floors would prevent SBA from lowering limits to an amount Congress believes is establishing floors would prevent SBA from lowering limits to an amount Congress believes is
too low. On the other hand, floors could limit the number of loans that can be serviced if loan too low. On the other hand, floors could limit the number of loans that can be serviced if loan
demand is high. demand is high.
Regional Cost Variations
As previously, mentioned, home values vary by region. If home value variation is a concern, As previously, mentioned, home values vary by region. If home value variation is a concern,
Congress could establish a home disaster loan limit higher than the national median, or consider Congress could establish a home disaster loan limit higher than the national median, or consider
the use of a formula that adjusts for this variation. For example, the disaster loan limits could be the use of a formula that adjusts for this variation. For example, the disaster loan limits could be
periodically adjusted based on state or regional home costs or values, construction costs, or some periodically adjusted based on state or regional home costs or values, construction costs, or some
other information. The adjustment could be analogous to the formula set in statute to determine other information. The adjustment could be analogous to the formula set in statute to determine
SBA disaster loan interest rates. Under the Small Business Act, interest rates for home disaster SBA disaster loan interest rates. Under the Small Business Act, interest rates for home disaster
loans for homeowners unable to secure credit elsewhere reflect: loans for homeowners unable to secure credit elsewhere reflect:
the rate prescribed by the Administration but not more than one-half the rate determined the rate prescribed by the Administration but not more than one-half the rate determined
by the Secretary of the Treasury taking into consideration the current average market yield by the Secretary of the Treasury taking into consideration the current average market yield
on outstanding marketable obligations of the United States with remaining periods to on outstanding marketable obligations of the United States with remaining periods to
maturity comparable to the average maturities of such loans plus an additional charge of maturity comparable to the average maturities of such loans plus an additional charge of
not to exceed 1 per centum per annum as determined by the Administrator, and adjusted to not to exceed 1 per centum per annum as determined by the Administrator, and adjusted to
the nearest one-eighth of 1 per centum but not to exceed 8 per centum per annum.35 the nearest one-eighth of 1 per centum but not to exceed 8 per centum per annum.35
Essentially, the SBA Administrator is authorized to base disaster loan interest rates on current, Essentially, the SBA Administrator is authorized to base disaster loan interest rates on current,
comparable average market yields so long as they do not exceed the interest rate ceilings set in comparable average market yields so long as they do not exceed the interest rate ceilings set in
statute. Similarly, the SBA Administrator could be required to establish disaster loan limits based statute. Similarly, the SBA Administrator could be required to establish disaster loan limits based
on a formula based on housing costs or values such as those ion a formula based on housing costs or values such as those in Figure 5 oror Figure 6, inflation, or nflation, or
some other metric. The disaster limit formula could be applied nationwide or reflect regional some other metric. The disaster limit formula could be applied nationwide or reflect regional
costs. costs.
If variations in costs and values within a state are a concern, then the adjustment could be based If variations in costs and values within a state are a concern, then the adjustment could be based
on data that provides greater county-level detail such as Fannie Mae and Freddie Mac maximum on data that provides greater county-level detail such as Fannie Mae and Freddie Mac maximum
loan limits for mortgages.36 Doing so could benefit those living in areas with home values higher loan limits for mortgages.36 Doing so could benefit those living in areas with home values higher
than the national median. For example, the major disaster declared for New York after Hurricane than the national median. For example, the major disaster declared for New York after Hurricane
Sandy provided assistance for twelve counties.37 As shown iSandy provided assistance for twelve counties.37 As shown in Figure 9, if the Fannie Mae and if the Fannie Mae and

on-sba-to-reverse-policy-that-limits-economic-disaster-loan-program-eidl-loans-to-150k on-sba-to-reverse-policy-that-limits-economic-disaster-loan-program-eidl-loans-to-150k
34 For more information on the SBA Disaster Loan Account, see CRS Insight IN11433, 34 For more information on the SBA Disaster Loan Account, see CRS Insight IN11433, Supplemental Appropriations:
SBA Disaster Loan Account, by Bruce R. Lindsay et al. , by Bruce R. Lindsay et al.
35 15 U.S.C. 636 (d)(4)(A) 35 15 U.S.C. 636 (d)(4)(A).
36 Fannie Mae and Freddie Mac are restricted by law to purchasing single-family mortgages with origination balances 36 Fannie Mae and Freddie Mac are restricted by law to purchasing single-family mortgages with origination balances
below a specific amount, which are known as the “conforming loan limit.” Loans above the conforming loan limit are below a specific amount, which are known as the “conforming loan limit.” Loans above the conforming loan limit are
known as “jumbo loans.” known as “jumbo loans.”
37 Federal Emergency Management Agency, 37 Federal Emergency Management Agency, New York Hurricane Sandy (DR-4085), November 19, 2012, , November 19, 2012,
https://www.fema.gov/disaster/4085. The declared counties were Bronx, Kings, Nassau, New York, Orange, Putnam, https://www.fema.gov/disaster/4085. The declared counties were Bronx, Kings, Nassau, New York, Orange, Putnam,
Queens, Richmond, Rockland, Suffolk, Sullivan, Ulster, and Westchester. Queens, Richmond, Rockland, Suffolk, Sullivan, Ulster, and Westchester.
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Freddie Mac loan limit data accurately reflects home values, then homeowners in each county Freddie Mac loan limit data accurately reflects home values, then homeowners in each county
may struggle to rebuild and recover with a $200,000 disaster home loan. may struggle to rebuild and recover with a $200,000 disaster home loan.
Figure 9. Hurricane Sandy
New York Hurricane Sandy Declared Counties: 2021 Fannie Mae and Freddie Mac Mortgage Loan Limits New York Hurricane Sandy Declared Counties: 2021 Fannie Mae and Freddie Mac Mortgage Loan Limits

Source: Federal Emergency Management Agency, New York Hurricane Sandy (DR-4085), November 19, 2012, Federal Emergency Management Agency, New York Hurricane Sandy (DR-4085), November 19, 2012,
https://www.fema.gov/disaster/4085; and Federal Housing Finance Agency, https://www.fema.gov/disaster/4085; and Federal Housing Finance Agency, FHFA Announces Conforming Loan Limits
for 2021, https://www.fhfa.gov/Media/PublicAffairs/Pages/FHFA-Announces-Conforming-Loan-Limits-for-, https://www.fhfa.gov/Media/PublicAffairs/Pages/FHFA-Announces-Conforming-Loan-Limits-for-
2021.aspx2021.aspx.
Congress could require SBA to adjust home disaster loan limits periodically, or establish loan Congress could require SBA to adjust home disaster loan limits periodically, or establish loan
limits at the time of the declared disaster, as is the case with disaster loan interest rates. limits at the time of the declared disaster, as is the case with disaster loan interest rates.
Concluding Observations
SBA disaster loan limits have been placed in statute and created by SBA regulatory action. SBA disaster loan limits have been placed in statute and created by SBA regulatory action.
Historically, businesses have been eligible for the maximum amount set in statute whereas Historically, businesses have been eligible for the maximum amount set in statute whereas
homeowners have been eligible for a lesser amount than has been set in statute. To some, this has homeowners have been eligible for a lesser amount than has been set in statute. To some, this has
been an effective approach to (1) supplement, as opposed to replace, private insurance, (2) avoid been an effective approach to (1) supplement, as opposed to replace, private insurance, (2) avoid
moral hazard, and (3) balance the desire to help disaster victims with the need for prudent federal moral hazard, and (3) balance the desire to help disaster victims with the need for prudent federal
spending. spending.
Others may find increases in inflation, especially increases in median home values and prices, Others may find increases in inflation, especially increases in median home values and prices,
constitute a compelling reason to increase SBA disaster loan limits and to index those limits to constitute a compelling reason to increase SBA disaster loan limits and to index those limits to
inflation. They may be particularly concerned that housing costs in some areas of the nation inflation. They may be particularly concerned that housing costs in some areas of the nation
exceed home disaster loan limits by a substantial margin. In their view, homeowners in those exceed home disaster loan limits by a substantial margin. In their view, homeowners in those
areas may be incapable of fully recovering because the loans cover too small a share of their areas may be incapable of fully recovering because the loans cover too small a share of their
repair and rebuilding costs. Similarly, the cost of replacing home items has increased since 1994. repair and rebuilding costs. Similarly, the cost of replacing home items has increased since 1994.
Consequently, limits on personal property loans do not have the same purchasing power to Consequently, limits on personal property loans do not have the same purchasing power to
replace lost vehicles and furniture as they did in 1994. replace lost vehicles and furniture as they did in 1994.
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Appendix. SBA Disaster Loan Categories
The following provides a brief overview of each SBA disaster loan category, including eligible The following provides a brief overview of each SBA disaster loan category, including eligible
recovery activities and loan terms. recovery activities and loan terms.
Personal Property Disaster Loans
Personal Property Disaster Loans cover only uninsured or underinsured property and primary Personal Property Disaster Loans cover only uninsured or underinsured property and primary
residences in a declared disaster area. Personal Property Disaster Loans can be used to repair or residences in a declared disaster area. Personal Property Disaster Loans can be used to repair or
replace clothing, furniture, cars, or appliances damaged or destroyed in the disaster. Interest rate replace clothing, furniture, cars, or appliances damaged or destroyed in the disaster. Interest rate
ceilings for Personal Property Disaster Loans are statutorily set at 8% per annum or 4% per ceilings for Personal Property Disaster Loans are statutorily set at 8% per annum or 4% per
annum if the applicant is unable to obtain credit elsewhere.38 The loans can have maturities up to annum if the applicant is unable to obtain credit elsewhere.38 The loans can have maturities up to
30 years. The maximum loan amount for a Personal Property Disaster Loan is set in regulation at 30 years. The maximum loan amount for a Personal Property Disaster Loan is set in regulation at
$40,000.39 $40,000.39
Real Property Disaster Loans
Real Property Disaster Loans provide creditworthy homeowners located in a declared disaster Real Property Disaster Loans provide creditworthy homeowners located in a declared disaster
area with up to $200,000 to repair or restore the homeowner’s primary residence to its pre-area with up to $200,000 to repair or restore the homeowner’s primary residence to its pre-
disaster condition.40 The loans may not be used to upgrade a home or build additions to the home, disaster condition.40 The loans may not be used to upgrade a home or build additions to the home,
unless the upgrade or addition is required by city or county building codes. Secondary homes or unless the upgrade or addition is required by city or county building codes. Secondary homes or
vacation properties are not eligible for Real Property Disaster Loans.41 Limits for Real Property vacation properties are not eligible for Real Property Disaster Loans.41 Limits for Real Property
Disaster Loans are set in regulation.42 Disaster Loans are set in regulation.42
Business Physical Disaster Loans
Business Physical Disaster Loans are available to almost any business located in a declared Business Physical Disaster Loans are available to almost any business located in a declared
disaster area.43 Business Physical Disaster Loans can be used to repair or replace damaged disaster area.43 Business Physical Disaster Loans can be used to repair or replace damaged
physical property including machinery, equipment, fixtures, inventory, and leasehold physical property including machinery, equipment, fixtures, inventory, and leasehold
improvements that are not covered by insurance. Interest rates for Business Physical Disaster improvements that are not covered by insurance. Interest rates for Business Physical Disaster
Loans cannot exceed 8% per annum or 4% per annum if the business cannot obtain credit Loans cannot exceed 8% per annum or 4% per annum if the business cannot obtain credit
elsewhere.44 Business Physical Disaster Loans can have maturities up to 30 years. The maximum elsewhere.44 Business Physical Disaster Loans can have maturities up to 30 years. The maximum
loan amount provided for a Business Physical Disaster Loan is $2 million.45 loan amount provided for a Business Physical Disaster Loan is $2 million.45
~~Economic Injury Disaster Loans~~
~~EIDLs are available to businesses located in a declared disaster area that have suffered substantial~~
~~economic injury, are unable to obtain credit elsewhere, and are defined as small by SBA size~~
~~regulations.46 Small agricultural cooperatives and most private and nonprofit organizations that~~

38 15 U.S.C. 636(d)(5)(B) and 15 38 15 U.S.C. 636(d)(5)(B) and 15 ~~USC~~U.S.C. 636(d)(5)(A). 636(d)(5)(A).
39 13 C.F.R. §123.105(a)(1). 39 13 C.F.R. §123.105(a)(1).
40 Only uninsured or otherwise uncompensated disaster losses are eligible for loan assistance. 40 Only uninsured or otherwise uncompensated disaster losses are eligible for loan assistance.
41 Qualified rental properties may be eligible for assistance under SBA’s business loan program. 41 Qualified rental properties may be eligible for assistance under SBA’s business loan program.
42 13 C.F.R. §123.105(a)(2). 42 13 C.F.R. §123.105(a)(2).
43 See C.F.R. §§123.200 and 123.201 for eligibility requirements. 43 See C.F.R. §§123.200 and 123.201 for eligibility requirements.
44 15 U.S.C. §636(d)(4)(C) and 15 44 15 U.S.C. §636(d)(4)(C) and 15 ~~USC~~U.S.C. §636(d)(5)(C). 45 15 U.S.C. §636(b)(8)(A). Congressional Research Service 17 SBA Disaster Loan Limits: Policy Options and Considerations Economic Injury Disaster Loans EIDLs are available to businesses located in a declared disaster area that have suffered substantial economic injury, are unable to obtain credit elsewhere, and are defined as small by SBA size regulations.46 Small agricultural cooperatives and most private and nonprofit organizations that ~~§636(d)(5)(C).~~
~~45 15 U.S.C. §636(b)(8)(A).~~
~~46 Size standards vary according to many factors including industry type, average firm size, and start-up costs and entry~~
barriers. For more information on SBA business size requirements see CRS Report R40860, Small Business Size
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~~SBA Disaster Loan Limits: Policy Options and Considerations~~

have suffered substantial economic injury as the result of a declared disaster are also eligible for have suffered substantial economic injury as the result of a declared disaster are also eligible for
EIDLs. The loans are designed to help businesses meet financial obligations and operating EIDLs. The loans are designed to help businesses meet financial obligations and operating
expenses that could have been met had the disaster not occurred. The loan proceeds can only be expenses that could have been met had the disaster not occurred. The loan proceeds can only be
used for working capital necessary to enable the business or organization to alleviate the specific used for working capital necessary to enable the business or organization to alleviate the specific
economic injury and to resume normal operations. The interest rate ceilings for EIDL are economic injury and to resume normal operations. The interest rate ceilings for EIDL are
statutorily set at 4% per annum or less and the loans can have maturities up to 30 years.47 The statutorily set at 4% per annum or less and the loans can have maturities up to 30 years.47 The
maximum loan amount for EIDL is $2 million.48 maximum loan amount for EIDL is $2 million.48

Author Information

Bruce R. Lindsay Bruce R. Lindsay
R. Corinne Blackford R. Corinne Blackford
Specialist in American National Government Specialist in American National Government
Analyst in Small Business and Economic Analyst in Small Business and Economic

Development Policy Development Policy

Acknowledgments
Robert Dilger, Senior Specialist, Government and Finance Division, assisted with editorial comments and Robert Dilger, Senior Specialist, Government and Finance Division, assisted with editorial comments and
suggestions; Jared Nagel, Senior Research Librarian, and Maura Mullins, Research Librarian, Government suggestions; Jared Nagel, Senior Research Librarian, and Maura Mullins, Research Librarian, Government
and Finance Division, helped compile the data for this report; Brion Long, Graphics Specialist, Publishing and Finance Division, helped compile the data for this report; Brion Long, Graphics Specialist, Publishing
and Editorial Resources Section, and Calvin DeSouza, Geospatial Information Systems Analyst, assisted and Editorial Resources Section, and Calvin DeSouza, Geospatial Information Systems Analyst, assisted
with figures for this report.with figures for this report.

46 Size standards vary according to many factors including industry type, average firm size, and start-up costs and entry barriers. For more information on SBA business size requirements see CRS Report R40860, Small Business Size Standards: A Historical Analysis of Contemporary Issues, by Robert Jay Dilger, R. Corinne Blackford, and Anthony A. , by Robert Jay Dilger, R. Corinne Blackford, and Anthony A.
Cilluffo. See also 13 C.F.R. §123.300 for eligibility requirements. Cilluffo. See also 13 C.F.R. §123.300 for eligibility requirements.
47 The 4% interest rate ceiling is established in regulation: 13 C.F.R. §123.302. 47 The 4% interest rate ceiling is established in regulation: 13 C.F.R. §123.302.
48 15 USC §636(b)(8)(A). 48 15 USC §636(b)(8)(A).
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Disclaimer
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