From CBIA News, November 2001

SBA offering economic injury disaster loans

Businesses suffering financially either as a result of the Sept. 11 terrorist attacks or the call-up of military reservists may be eligible for economic injury disaster loans available through the U.S. Small Business Administration (SBA). Both types of loans provide working capital to meet “ordinary and necessary” operating expenses that would have been met, but cannot be as a direct result of the attacks or military call-up.

For firms affected by Sept. 11 attacks

The September 11 Economic Injury Disaster Loan (EIDL) program helps eligible businesses located outside the declared disaster areas of the World Trade Center and the Pentagon. It provides funds for working capital to businesses that cannot meet their operating expenses as a direct result of the terrorist attacks or any federal action taken between Sept. 11 and Oct. 22 (the effective date of the regulations implementing the program).

According to an SBA fact sheet (available online at www.sba.gov/news/current01/economicinjuryfactsheet.html), a business may be eligible if it:

• is located in an airport or other facility whose operations were affected as a result of national security measures mandated by the federal government;

• supplied services to a business located in or near the World Trade Center or the Pentagon;

• supplied services to, or is otherwise dependent on, a business or industry hurt by the attacks on the World Trade Center or the Pentagon;

• is dependent on a business or organization whose operations were affected by the attacks or by the subsequent federal action; or

• was directly impacted by the destruction of the World Trade Center or damage to the Pentagon, or related federal actions. 

The amount of an EIDL loan will be limited to the actual economic injury that is not compensated by business interruption insurance or some other resource and that is beyond the ability of the business or its owner to handle. Loans may be for a maximum of 30 years and $1.5 million. Collateral may be required, depending on the amount of the loan and other circumstances.

Companies that have the financial capacity to fund their own recovery or that can get credit from a nongovernment source are not eligible for an EIDL loan. And the loan cannot be used to cover lost income, lost profits, losses attributable to an economic downturn, or to refinance long-term debt or expand the business.

For firms hurt by reservist call-up

Small businesses that employ military reservists who were called to active duty in response to the terrorist attacks on the World Trade Center and the Pentagon may qualify for Military Reservist Economic Injury Disaster Loans (MREIDL). These loans are available from the SBA during a period of military conflict. 

The program will provide loans to eligible small businesses to cover operating expenses that would have been met, but cannot be because an essential employee was called to active duty in his or her role as a military reservist. 

Small businesses may apply for MREIDLs of up to $1.5 million if they have been financially impacted due to the loss of a key employee. These working-capital loans may be used to pay fixed debts, payroll, accounts payable and other bills that cannot be paid. The interest rate on these loans is 4%, with a maximum term of 30 years. 

The SBA determines the amount of economic injury, the term of each loan and the payment amount, based on the financial circumstances of each borrower. The filing period begins the date the essential employee is ordered to active duty and ends 90 days after the date the employee is discharged from active duty.

For more information

To apply for either type of economic injury disaster loan, contact the SBA disaster area office in Niagara Falls, NY, 1-800-659-2955. For more information about any SBA program, call 1-800-U-ASK-SBA or visit www.sba.gov. 

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