Economic Injury Loans
If your small business or private, non-profit organization 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.
A. The loan will provide you with operating funds until your business or private, non-profit organization 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.
A. You may request an EIDL for the amount of economic injury and operating needs, but not in excess of what your business or private, non-profit organization could have paid had the disaster not occurred. In determining your eligible amount, the SBA will look at :
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.
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.
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.
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.
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.
A. Collateral is required for all EIDL loans over $5,000. SBA takes real estate as collateral where it is available. Applicants do not need to have full collateral; SBA will take what is available to secure each 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.
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,
A. No. An EIDL is intended to help you maintain a secure financial condition until your business or private, non-profit organization 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.
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.
A. Yes, except that religious and certain other private, non-profit organizations are not eligible.
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 or private, non-profit organization. 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.
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.
A. If the applicant is in a special flood hazard area, it must have flood insurance before we can disburse a loan. If the applicant was legally required to maintain flood insurance but did not, a disaster loan will not be made.