The bill amends the Small Business Act to treat prolonged power outages as a qualifying disaster under the SBA disaster loan program. It also expands the allowable uses of disaster loan proceeds to include energy resilience systems and the replacement of food and drink lost during such outages.
These changes are designed to help small businesses recover more quickly and to invest in resilience against future outages. The definition of a prolonged power outage is set with specific thresholds, intended to standardize when such an event qualifies for disaster loan assistance.
Under the new paragraph (18), a prolonged power outage will qualify as a disaster for purposes of existing loan programs, and loan proceeds can be used for, among other things, energy resilience equipment (generators, solar, microgrids, batteries, and related technologies) and for replacing food and drink lost due to the outage. The definition relies on two parallel tests: one tied to the loss affecting a minimum pool of homes or business concerns and uninsured losses, and another tied to a similar threshold occurring in conjunction with a specified outage duration (not fewer than 48 hours).
The Administrator retains authority to determine which technologies qualify for resilience investments.
At a Glance
What It Does
Creates a new disaster-qualifying event—prolonged power outages—and allows SBA disaster loan proceeds to fund energy resilience systems and food replacement in affected loans.
Who It Affects
Small businesses and other eligible loan recipients in outage-affected areas; SBA loan administrators; energy-resilience equipment vendors and installers.
Why It Matters
It formalizes resilience-focused recovery, helping small businesses bounce back faster and invest in systems that reduce future outage risk.
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What This Bill Actually Does
The bill adds prolonged power outages to the list of events that count as a disaster for SBA disaster loans. It authorizes loan funds to cover energy resilience investments (like generators, solar panels, batteries, microgrids, etc.) and to reimburse the cost of replacing food and drink lost due to the outage.
The outage must meet defined thresholds to qualify, including a minimum number of homes or businesses affected and a minimum uninsured loss, plus a duration requirement of at least 48 hours for certain uses. The energy resilience purchases are to be determined eligible by the SBA Administrator.
The overall aim is to broaden small-business recovery options after outages and to encourage investments that lessen future disruption.
The Five Things You Need to Know
New disaster-qualifying event: prolonged power outages.
Loan proceeds can fund energy resilience equipment.
Proceeds may be used to replace food and drink lost.
Prolonged outages must meet defined thresholds and duration.
Administrator determines eligible resilience technologies.
Section-by-Section Breakdown
Every bill we cover gets an analysis of its key sections.
Prolonged power outage defined
The bill adds a new paragraph to Section 7(b) establishing that a prolonged power outage is a disaster for the purposes of SBA disaster loans. This sets the legal basis for treating outages of sufficient scale and duration as qualifying events under existing loan programs, enabling expanded relief options for affected borrowers.
Uses of loan proceeds for resilience and food replacement
In addition to any other allowable uses, if a borrower receives a disaster loan for a prolonged power outage, the proceeds may be used to purchase energy resilience systems (such as generators, solar panels, wind turbines, microgrids, batteries, and related technologies) and to pay for the cost of replacing food and drink lost due to the outage. These new uses are contingent on the loan being issued due to a prolonged outage and are intended to support both immediate recovery and longer-term resilience.
Thresholds and duration defining outage events
The bill defines the outage criteria in two parts. For purposes related to paragraph (1)(A), the outage must cause uninsured losses of at least 40% of the estimated replacement value for not fewer than 25 homes or 25 businesses in a county or similar subdivision. For purposes related to paragraph (2), not fewer than 25 homes or businesses in a county or subdivision must concurrently experience outages lasting not less than 48 hours. These thresholds set the bar for when a prolonged outage triggers disaster loan eligibility and use.
Statutory changes and numbering
The amendment includes a formal redesignation of the existing paragraph numbering (moving the current paragraph 16 to 17) and inserting the new paragraph (18). This is a technical adjustment to accommodate the new disaster category and ensure consistent cross-reference with the Small Business Act’s disaster loan provisions.
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Explore Finance in Codify Search →Who Benefits and Who Bears the Cost
Every bill creates winners and losers. Here's who stands to gain and who bears the cost.
Who Benefits
- Small businesses located in counties experiencing prolonged outages gain access to expanded disaster loan uses for resilience investments and stock replacement.
Who Bears the Cost
- SBA and its staff, who may face increased administrative responsibilities and potential risk monitoring for expanded uses.
- Borrowers may incur higher debt obligations as they participate in resilience investments and food replacement funded by disaster loans.
- Lenders participating in SBA disaster loan programs may face additional compliance and risk assessment requirements.
Key Issues
The Core Tension
The central tension is between expanding access to disaster loans for resilience and food replacement (which supports rapid recovery) and maintaining prudent credit risk and program sustainability within a federal loan program.
The expansion to include energy resilience investments and food replacement as disaster loan uses creates a mechanism to accelerate recovery after outages but also introduces new operational considerations for SBA, lenders, and borrowers. Implementation will require careful monitoring of credit risk, appropriateness of energy resilience technology eligibility, and the balance between short-term relief and long-term indebtedness for small businesses.
Additionally, the thresholds for defining a prolonged outage may create geographic and situational gaps in coverage, depending on how outages cluster in practice. The bill relies on administrator discretion to determine eligible resilience technologies, which could lead to variability in what is considered an eligible expenditure across different disaster scenarios.
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