The Disaster Loan Accountability and Reform Act, or DLARA, aims to significantly improve transparency and accountability within the Small Business Administration's (SBA) disaster loan program. It introduces new reporting requirements, enhances budget oversight, and establishes mechanisms to manage funding shortfalls more effectively. The bill also mandates several external reviews to assess past performance and recommend future improvements.

The Act strengthens monthly disaster loan reporting by requiring the SBA Administrator to provide more specific details, including projected dates for when funding will reach 10 percent and when it will be depleted. It also mandates a summary of changes to obligation and expenditure estimates, with a prohibition on the Administrator's official travel if reports are not submitted on time. Furthermore, the bill amends federal budget law to require separate statements in the President's budget request detailing the requested appropriations, 10-year average costs, and explanations for differences for both SBA disaster loans and COVID-EIDL loans, covering both program and administrative costs.

To address potential funding issues, the bill establishes new requirements for when disaster loan funding is low. If the unobligated balance falls below 10 percent of the 10-year average annual cost, the Administrator must notify Congress within 24 hours. During such periods, the Administrator may limit the obligation of funds to only those amounts for which collateral is required. This provision includes a sunset clause, expiring four years after enactment, and requires a Government Accountability Office (GAO) report if this limitation authority is exercised.

The legislation also mandates several comprehensive oversight reports. The GAO is tasked with reporting on the cost and subsidy effects of recent SBA rule changes impacting disaster loan terms, such as maximum loan amounts and collateral requirements. Additionally, the GAO must analyze SBA disaster loan account metrics, including average weekly obligation rates and disbursement amounts. An SBA Inspector General review is also required to investigate past funding shortfalls, identify any reporting failures, analyze spending divergences, assess internal controls, and examine the impact of any SBA reorganizations on these shortfalls, with recommendations for preventing future issues.

Finally, the Administrator must submit a report within 30 days of enactment detailing planned corrections to improve forecasting, data quality, and budget assumptions for direct disaster loans. Subsequent updates are required every 90 days until all identified corrections have been fully implemented, ensuring continuous improvement in the program's financial management.