Community Disaster Loans
Program Funding
Annual program obligations reported to SAM.gov.
Program Objective
To provide loans subject to congressional loan authority to any local government that has suffered substantial loss of revenues in an area designated in a Stafford Act major disaster declaration in order to assist communities affected by an incident to perform its governmental functions. The local government must demonstrate a need for financial assistance and the funds can only be used to maintain existing functions of a municipal operating character or expand functions to meet disaster-related needs.
Eligibility
Eligible Applicants
- Local governments
Local (includes state-designated Indian tribes and U.S. territories, excludes institutions of higher education and some hospitals) government applicants must be in a designated major disaster area and must demonstrate that they meet the specific conditions of 44 C.F.R. Part 206, Subpart K, Community Disaster Loans. To be eligible, the applicant must demonstrate: 1) a substantial loss of revenues as a result of a major disaster; 2) a need for financial assistance to perform its governmental functions. During the 2017 hurricane season, a supplemental provided funding and new guidance specific to Hurricanes Harvey, Irma, and Maria. Public Law 115-72 and Public Law 115-123 provide additional supplemental appropriations and eligibility criteria for disaster relief requirements for the fiscal year ending September 30, 2018. Further, P.L. 116-260 removed the loan cap, provided alternate eligibility criteria, and extended the deadline for FEMA to issue a loan only for those disasters that were declared in calendar year 2018. P.L. 117-43, signed on September 30, 2021, cancelled the repayment of balances outstanding on all loans as of September 30, 2021.
Beneficiaries
- 5
Local governments in a designated disaster area.
How to Apply
Application Procedure
Upon declaration of a major disaster, an application for a Community Disaster Loan is made through the Governor's Authorized Representative to the FEMA Regional Administrator in accordance with 44 C.F.R. §206.364. The Assistant Administrator for the Recovery Directorate or designee approves or disapproves the loan. The Designated Loan Officer will execute a Promissory Note with the applicant. The Promissory Note must be co-signed by the state, or if the state cannot legally co-sign the note, the local government must pledge collateral security.
Award Procedure
Funds are disbursed to the local government when requested in accordance with the, or submittal of the Disbursement Request Form. All borrowers must follow requirements of 2 C.F.R. Part 200.
From 1 to 6 months. The loan must be approved in the fiscal year of the disaster or the fiscal year immediately following.
Program details & compliance
Description
To provide loans subject to Congressional loan authority to any local government that has suffered substantial loss of revenues in an area designated by a major disaster under the Stafford Act in order to assist communities affected by an incident in order to perform its governmental functions.
Use of Funds
Allowed Uses
Loans are made only to local governments or other political subdivisions of the state/tribe/territory and are based on need. The funds cannot be used to meet the non-federal share of any federal program, debt service, finance capital improvements, or repair or restore public facilities. Applicants must be in a designated major disaster area and –unless specified differently through a particular public law—must demonstrate that they meet the specific conditions of FEMA Emergency Management and Assistance Regulations at 44 C.F.R. Part 206, Subpart K, Community Disaster Loans. To be eligible, the applicant must demonstrate: 1) a substantial loss of revenues as a result of a major disaster; and 2) a need for financial assistance to perform its governmental functions. For traditional CDLs, the amount of the loan is based on the demonstrated need and shall not exceed 25% of the applicant’s Operating Budget expenditures, up to $5 million. The interest rate is the U.S. Treasury rate for 5-year maturities on the date the Promissory Note is executed, adjusted to the nearest 1/8th. The term of the loan is 5 years for traditional loans but may be extended. Interest accrues on the funds as they are disbursed. When applicable, the Assistant Administrator of the Recovery Directorate may cancel repayment of all or part of the traditional loan if the revenues of the applicant in the 3 fiscal years following the disaster are insufficient to meet the operating budget because of disaster-related revenue losses and un-reimbursed disaster related operating expenses.
Required Documentation
The CDL application is developed from financial information contained in the local government's published financial reports and current annual operating budget. Loan awards will be determined in accordance with 2 C.F.R. Part 200 and 44 C.F.R. Part 206, Subpart K.
Reporting & Compliance
Applicable 2 CFR 200 Subparts
- Subpart B — General Provisions
- Subpart C — Pre-Federal Award Requirements
- Subpart D — Post-Federal Award Requirements
- Subpart E — Cost Principles
- Subpart F — Audit Requirements