Disaster Loan Forgiveness Act

The Disaster Loan Forgiveness Act (HR 8581) cancels or repays part of Small Business Administration (SBA) disaster loans for low-to-moderate-income individuals and small businesses. It applies to borrowers with household income at or below 400% of the federal poverty line (covering 100% loan forgiveness) or between 400% of poverty and $250,000 (covering 50% forgiveness), and to small businesses/nonprofits (up to 50% forgiveness). The bill modifies SBA loan rules to automatically apply these relief percentages based on income and business type. It directly affects SBA disaster loan recipients who meet the income thresholds, reducing their debt without requiring new applications. The policy change specifically targets post-disaster financial relief for vulnerable borrowers.