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...FROM THE FEDERAL EMERGENCY
MANAGEMENT AGENCY
New
Jersey businesses located in the counties of Bergen,
Hudson, Middlesex, and Union counties who were impacted
because of the World Trade Center Terrorist Incident
may be eligible for Economic Injury Disaster Loans from
the U.S. Small Business Administration. Please contact
the SBA at 1-800-659-2955 for more information, or to
the apply for assistance.
SBA
Home page: www.sba.gov
THE
FACTS ABOUT . . ECONOMIC INJURY DISASTER LOANS
FOR SMALL BUSINESSES
from the SBA U.S. Small Business Administration,
America's Small Business Resource
If
your small business has suffered substantial economic
injury, regardless of physical damage, and is located
in a declared disaster area, you may be eligible for
financial assistance from the U.S. Small
Business Administration.
Small
businesses and small agricultural cooperatives that
have suffered substantial economic injury resulting
from a physical disaster or an agricultural production
disaster designated by the Secretary of Agriculture
may be eligible for the SBA's Economic Injury Disaster
Loan Program. Substantial economic injury is the inability
of a business to meet its obligations as they mature
and to pay its ordinary and necessary operating expenses.
An
EIDL can help you meet necessary financial obligations
that your business could have met had the disaster not
occurred. It provides relief from economic injury caused
directly by the disaster and permits you to maintain
a reasonable working capital position during the period
affected by the disaster.
The
SBA provides EIDL assistance only to those businesses
we determine are unable to obtain credit elsewhere.
The SBA can provide up to $1.5 million in disaster assistance
to a business. This loan cap includes both economic
injury and physical damage assistance. Your loan amount
will be based on your actual economic injury and financial
needs.
The
interest rate on EIDLs cannot exceed 4 percent per year.
The term of these loans cannot exceed 30 years. Your
term will be determined by your ability to repay the
loan. (See SBA publication No. DA-2, Physical Disaster
Business Loans.)
Frequently
Asked Questions About Economic Injury Disaster
Loans
Q.
How may I use an EIDL?
A.
The loan will provide you with operating funds
until your business recovers. To the extent you
could have made payments had the disaster not
occurred, you may use the loan to make payments
on short-term notes, accounts payable and installment
payments on long-term notes. (See SBA publication
No. DA-2, Physical Disaster Business Loans.)
Q. How much money may
I borrow?
A.
You may request an EIDL for the amount of economic
injury and operating needs, but not in excess
of what your business could have paid had the
disaster not occurred. In determining your eligible
amount, the SBA will look at:
- the
total of your debt obligations;
-
operating expenses that mature during the period affected
by the disaster, plus the amount you need to maintain
a reasonable working capital position during that
period;
-
and expenses you could have met and a working capital
position you could have maintained had the disaster
not occurred.
The
amount of your economic injury does not automatically
represent the dollar amount of your loan eligibility;
the SBA will evaluate the information you provide and
determine the reasonableness of
your loan request.
Q. Must I submit a personal
financial statement with my loan application?
A.
Yes. The SBA must review your financial statement
and one for each partner, officer, director and
stockholder with 20 percent or more ownership.
The SBA requires the principals of the business
to personally guarantee repayment of the loan
and, in some instances, to secure the loan by
pledging additional collateral.
Q. Must I sell assets that
are not used in my regular business operations
before I am eligible for an EIDL?
A.
The SBA will review the availability of such assets
to determine if part or all of your economic injury
might be remedied by using such assets. The business
and its principal owners must use their own resources
to overcome the economic injury to the greatest
extent possible without causing undue
hardship.
Q. If I can borrow from
a bank, am I still eligible for SBA assistance?
A.
Private credit sources must be used as much as
possible to overcome the economic injury. The
SBA can provide EIDL assistance only to the extent
the business (and its principals) cannot recover
by using its own resources and normal lending
channels.
Q. What are some prohibited
uses of an EIDL?
A.
You may not use funds to pay cash dividends or
bonuses, or for disbursements to owners, partners,
officers or stockholders not directly related
to the performance of services for the business.
The SBA will not refinance long?term debts or
provide working capital that was needed by the
business prior to the disaster.
Q. Is collateral required
for an EIDL?
A.
Generally a business must pledge collateral to
the extent available. Occasionally, the SBA will
make very small EIDLs on an unsecured basis. The
SBA will not decline an EIDL request solely because
available collateral will not adequately secure
the loan, and a business will not be required
to pledge more collateral than is necessary. The
SBA may decline a loan if a business has collateral
available but refuses to pledge it.
Q.
How long will I have to pay off the SBA loan?
A.
The SBA will assess your financial situation and
will set loan terms based on your needs and repayment
ability. The maximum maturity for disaster loans
is 30 years.
Q. What kind of documentation
should I use to show my losses?
A. In order
for the SBA to compare your financial condition
and operating results preceding the disaster with
those during and since the disaster period, you
must furnish balance sheets and operating statements
for similar periods of time. The specific requirements
are contained in the EIDL application form.
Q. If I receive an EIDL,
may I spend the loan money any way I want?
A.
No. An EIDL is intended to help you maintain a
secure financial condition until your business
is back to normal. Your loan will be made for
specific and designated purposes. Remember that
the penalty for misusing disaster funds is immediate
repayment of one-and-a-half times the original
amount of the loan. The SBA requires that you
keep receipts and good records of all loan expenditures
for three years following receipt of your SBA
loan.
Q. May I expand my business
facilities or purchase a new line of inventory
with an EIDL?
A.
No.
Q. If I show the SBA
that I am not making a profit, is that enough
to qualify me for an EIDL?
A.
No. Neither lack of profit or loss of anticipated
sales alone is sufficient to establish substantial
economic injury. Substantial economic injury occurs
only when you cannot meet current obligations
because of the disaster. Indicators of economic
injury might be a larger than normal volume of
receivables, a lower sales volume, slow inventory
turnover, and the development of delinquencies
in trade payables, current accruals and debt payments.
Q. Are religious and
nonprofit organizations eligible for an EIDL?
A.
No. Only profit-oriented operating small businesses
and small agricultural cooperatives may apply.
Q. How soon will I know
if I get the loan?
A.
That depends on how soon you file a complete SBA
loan application. We must calculate the amount
of
economic injury and the working capital and other
needs of your business. We must be satisfied that
you can repay the loan out of business operations,
and we must take reasonable safeguards to help
ensure the loan is repaid. The SBA loan application
asks for the information we need. Since we process
applications in the order received, the faster
you can return it with all the needed information,
the faster we can work on it. We try to make a
decision on each application within 21 days. Be
sure the information in your application is complete;
missing information is the biggest cause of delay.
Q. How soon can I expect
the money?
A.
Loans greater than $5,000 have to be secured.
After we approve a request, we will tell you what
documents are needed to close the loan. When we
receive these documents, we can order the checks.
You will receive the money in installments, as it is
needed.
Q. Is flood insurance
needed to get a loan?
A.
If the business is in a special flood hazard area,
it must have flood insurance before we can disburse
a loan. If the business was legally required to
maintain flood insurance but did not, a disaster
loan will not be made.
For More Information
The
SBA delivers loans through four disaster area offices
located in Niagara Falls, N.Y.; Atlanta, Ga.; Fort.
Worth, Texas; and Sacramento, Calif. When a disaster
occurs, information on SBA assistance is available through
a toll?free number published locally.
SBA
offices are located in all 50 states, the District of
Columbia, Puerto Rico, the U.S Virgin Islands and Guam.
For the office nearest you, look under "U.S. Government"
in your telephone directory, or
contact:
- Phone:
1-800 U ASK SBA
- Fax:
202-205-7064
- E-mail:
answerdesk@sba.gov
- TDD:
704-344-6640
- Your
rights to regulatory fairness: 1-888-REG-FAIR
Internet:
SBA Home page: www.sba.gov
Gopher: http://www.sba.gov/gopher
All
of the SBA's programs and services are provided to the
public on a nondiscriminatory basis.
SBA
No. DA-3 (01-01)
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