FEMA Small Project Threshold: Limits, Payment, and Overruns

For disasters declared on or after October 1, 2025, the FEMA small project threshold is $1,093,800. A Public Assistance project with approved eligible costs below that figure is a “small” project and receives its federal share as a lump sum based on the estimate. A project at or above $1,093,800 is a “large” project and is reimbursed against actual documented costs. The line matters less for what it costs you and more for how you get paid, how much paperwork you carry, and who bears the risk when the work costs more than expected.

Where the Number Comes From

The threshold sits in 44 CFR 206.203, which fixes a base amount of $1,000,000 and directs FEMA to adjust it each fiscal year using the Consumer Price Index for All Urban Consumers.¹ The FFY2026 figure of $1,093,800 is roughly 2.9 percent above the FFY2025 figure of $1,062,900. The authority to run small projects on simplified procedures comes from Section 422 of the Stafford Act.

The threshold is compared against the total approved estimate of eligible work at a single site, before the federal cost share is calculated. The standard cost share is 75 percent federal and 25 percent non-federal, and can rise to 85 percent federal when the applicant builds qualifying hazard mitigation measures into the restoration.²

The Floor Below Which Nothing Is Funded

There is also a minimum. For FFY2026, a project must have at least $4,100 in eligible costs to qualify for Public Assistance at all. Damage that falls below the floor is not funded as a standalone project. Because FEMA groups work by logical categories at each site, several small repair items at the same facility can be combined on a single Project Worksheet to reach the minimum. Donated resources and management costs do not have to meet the floor by themselves, but they must attach to an otherwise eligible project that does.³

How FEMA Builds the Number That Gets Compared

Classification turns on the total estimated eligible cost of restoring a damaged facility to its pre-disaster function and design. That estimate captures direct construction expenses (labor, equipment, materials), related costs such as architectural and engineering fees, and applicant management costs incurred during the project.⁴

Two adjustments can move a project across the line. Insurance proceeds reduce the eligible cost: if a facility carried insurance, or should have carried it, FEMA deducts the actual or anticipated recovery before finalizing the estimate. That can push a project below the large-project threshold or even below the minimum. Donated labor, equipment, or materials, on the other hand, do not inflate the estimate for classification purposes. Their value is applied as a credit against the applicant’s non-federal cost share.³

The Project Worksheet is the document that carries all of this. Whatever number lands there is the number that decides classification.

What Changes When You Cross the Line

Getting Paid

Small projects are funded as a lump sum shortly after approval. FEMA does not reconcile the estimate against actual spending. Finish for less than the estimate and you keep the difference. Spend more, and you generally absorb the overage. The tradeoff is speed and simplicity: money arrives quickly, without stacks of invoices.⁴

Large projects work the opposite way. Reimbursement tracks documented actual costs, and funding typically arrives in increments as the applicant submits progress reports with invoices, contracts, and payroll records. FEMA adjusts the final obligation up or down based on what was actually spent. The administrative burden is heavier, but legitimate cost growth does not fall to the applicant.

Closing Out

Small project closeout is a certification exercise. The applicant submits a certification of completion to the state or territorial recipient within 90 days of the last small project’s work completion date. FEMA does not perform a formal final inspection. The recipient confirms the work complied with all grant conditions, including environmental and historic preservation requirements.³

Large project closeout requires a final inspection report and full documentation of actual costs. The applicant has 90 days from work completion to produce that package, and the recipient has 180 days from the work completion date or the project deadline, whichever comes first, to submit the completion certification and final funding claim to FEMA.³

What Doesn’t Change Just Because a Project Is Small

Simplified reimbursement does not mean simplified compliance. Several federal requirements apply to every Public Assistance project, and FEMA can deobligate funds after the fact when they are ignored.

Insurance. Applicants must obtain and maintain insurance against the hazard that caused the damage as a condition of receiving assistance. For flood-damaged facilities in identified flood hazard areas, FEMA reduces the grant by the amount a standard flood insurance policy would have covered. For other hazards, the applicant must carry insurance in an amount the state insurance commissioner certifies as reasonable. The purchase requirement is waived only when eligible facility costs do not exceed $5,000.⁵
Environmental and historic preservation review. Every PA-funded project must undergo EHP review before ground-disturbing work begins. Changes to a building’s footprint, location, or size, and work near wetlands, floodplains, or historic structures, trigger more intensive review. Starting work before the review closes puts eligibility at risk.³
Federal procurement standards. Applicants spending PA funds must follow the procurement methods in 2 CFR 200.320, on small projects too. Purchases above the micro-purchase threshold require price quotes from an adequate number of qualified sources. Sole-source contracts need specific justification. Procurement noncompliance is one of the most common reasons for deobligated funds.⁶
Records. Financial and program documentation must be retained for at least three years after the recipient’s final financial status report. The simplified closeout does not let you discard records early.

When a Small Project Runs Over Budget

Because FEMA does not true up small project estimates to actual costs, overruns on a single small project are ordinarily the applicant’s problem. The regulations offer one safety valve. Under 44 CFR 206.204(e), if an applicant’s total actual costs across all its small projects significantly exceed the combined approved estimates, the applicant may file a “net small project overrun” appeal.⁷

“Net” is doing real work in that phrase. FEMA looks at the combined picture. Savings on the projects that came in under budget offset the ones that ran over, and only the net overage is eligible for additional funding. The appeal must be filed within 60 days of completing the last small project, with documentation of the additional costs on each project that overran.

Disputes over how an individual project was classified or scoped follow the standard appeal process. A first appeal must be filed within 60 calendar days of the FEMA determination. The recipient (typically the state emergency management agency) has 120 days from the same determination date to forward the appeal to FEMA with a recommendation. Missing either deadline means automatic denial. A second appeal runs on the same clock, measured from the first appeal decision.⁸

Which Year’s Threshold Applies to Your Project

The applicable threshold depends on when the disaster was declared and when the project is obligated, not when the work is finished. FEMA made this explicit when it raised the base threshold in 2022: the new figure applied to Project Worksheets for disasters declared on or after March 13, 2020, that had not yet been obligated. Projects already obligated under an earlier threshold kept their original classification.⁹ For a multi-year recovery, that means the threshold from the declaration period travels with the project even as later fiscal years publish higher numbers.

1
eCFR. 44 CFR 206.203 – Federal Grant Assistance
2
Federal Register. Public Assistance Mitigation Cost Share Incentives Policy
3
FEMA. Public Assistance Program and Policy Guide Version 5.0 Amended
4
Regulations.gov. Public Assistance Simplified Procedures Threshold Determination
5
eCFR. 44 CFR Part 206 Subpart I – Public Assistance Insurance Requirements
6
eCFR. 2 CFR 200.320 – Procurement Methods
7
FEMA. Net Small Project Overrun
8
eCFR. 44 CFR 206.206 – Appeals and Arbitrations
9
Federal Register. Public Assistance Programs Simplified Procedures Large Project Threshold