On October 3, 2016, the Small Business Administration (SBA), having received no comments on its proposed rule (81 Fed. Reg. 19,934), which was published on April 6, 2016, amending its Disaster Assistance Loan Program (DALP) regulations (promulgated under the Recovery Improvements for Small Entities After Disaster Act of 2015, 129 Stat. 686, enacted on Nov. 25, 2015) issued a final rule (81 Fed. Reg. 67,901) that addresses three statutory amendments made to the terms and conditions of the Disaster Assistance Program. In addition to certain technical corrections, the final rule makes three primary changes:
- Expands the definition of “mitigating measure” to encompass the construction of a safe room or similar storm shelter designed to protect property and occupants.
- Increases the unsecured threshold for physical damage loans for non-major disasters. In particular, for the next two years (until November 25, 2018), the SBA will not require a collateral pledge to obtain upwards of $25,000 for all disaster declarations, both major and non-major. After November 25, 2018, the unsecured limit for physical damage loans for non-major disasters will return to its current threshold of $14,000.
- Permits the SBA to increase loan amounts in order to address contractor malfeasance. Prior to this third change, the SBA provided assistance only when malfeasance was committed by contractors. Now, the SBA will also provide assistance when malfeasance is committed by any “other person.”
The final rule became effective October 3, 2016.