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The U.S. Small Business Administration has implemented
some programs to help small businesses that were adversely affected by
the September 11, 2001, terrorist attacks and their aftermath.
1. Economic Injury Disaster Loans (EIDL)
- EIDL’s are available to eligible small businesses that suffered
substantial economic injury as a direct result of the September terrorist
attacks or a federal action taken in response to the attacks. EIDL’s
provide these small businesses with the working capital needed to pay
ordinary and necessary operating expenses that they are unable to pay
because of the disaster. These expenses may include fixed debts, payroll,
accounts payable and other bills.
- Small businesses may apply for a working capital loan of up to $l.5
million. The interest rate on these loans is 4 percent, 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.
- Since the expanded EIDL program began on October 22nd, the SBA has
approved more than $284 million in loans to small businesses nationwide.
In the aftermath of the September 11th attacks in New York and the Pentagon,
the SBA has approved $354 million in disaster loans to residents and
business owners in New York and Virginia.
- The U.S. Small Business Administration has extended the filing deadline
for EIDL’s to May 22, 2002.
2. Supplementary Terrorist Activity Relief (STAR):
The Defense Appropriations Act
Signed by President Bush on January 10, 2002, this
act reduces the on-going fee charged to the lender for qualifying businesses
on new 7(a) loans from 0.5% (50 basis points) of the outstanding balance
of the guaranteed portion of the loan to 0.25 % (25 basis points). This
fee reduction is effective for the full term of eligible loans approved
by SBA during the 1 year period beginning January 11, 2002 and ending
January 10, 2003, or until the funds available for this purpose are expended,
whichever occurs first. The SBA has received an appropriation that will
allow the Agency to fund up to approximately $4.5 billion in eligible
loans.
- Eligibility
The bill defines “adversely affected small business” as a
small business that has suffered economic harm or disruption of its
business operations as a direct or indirect result of the terrorist
attacks perpetrated against the United States on September 11, 2001.
Some examples of economic harm are: difficulty in making loan payments
on existing debt; difficulty in paying employees or vendors; difficulty
in purchasing materials, supplies or inventory; difficulty in paying
rents, mortgages or other operating expenses; and difficulty in securing
financing.
SBA does not intend that this list be considered all-inclusive. The
Agency anticipates that other circumstances can illustrate that a business
has suffered economic harm or a disruption of its business operations.
- Additional Information
Any 7(a) loan approved before January 11, 2002, will continue to be
subject to the 50 basis points fee, subject to the following exception:
If the lender finds that a borrower that had its 7(a) loan approved
prior to January 11, 2002, was adversely affected by the terrorist actions,
AND, if the loan is fully undisbursed, the lender may cancel the approved
loan and submit a new application which will then meet the criterion
of having been approved after January 10, 2002. If SBA approves the
new loan, a new loan number must be issued.
Lenders and other interested parties should contact their local SBA
field offices for more information.
To find out more about the SBA’s disaster assistance
program, go to www.sba.gov/disaster
For more information about all of the SBA’s programs
for small businesses, call the SBA Answer Desk at 1-800-U-ASK-SBA, or
visit the SBA’s web site at www.sba.gov
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