ABSTRACT
The disaster loan fund was originally established by the Small Business Act of 1958. Prior to the passage of the reconciliation act, the Small Business Administration (SBA) provided subsidized loans to individuals and businesses that were victims of either physical or nonphysical disasters. Physical disaster loans were made to property owners to rehabilitate property damaged by natural disasters such as floods, hurricanes, tornadoes, and earthquakes. Nonphysical disaster loans were made to small businesses that needed assistance in complying with various federal or state statutes and regulations and to small businesses suffering economic loss because of displacement or economic injury. The reconciliation act narrowed the definition of "disaster" to include only physical disasters and economic disasters resulting from physical catastrophes. The disaster loan fund is a revolving loan fund. The administration has successfully sought to make the disaster loan program very unattractive for most prospective lenders.
