As the 2001 congressional session went down to the wire, Congress seemed certain to expand a post-September 11 initiative from the SBA. On October 19, the SBA announced it would offer economic injury disaster loans of up to $1.5 million to any U.S. small business directly or indirectly affected by the attacks on the World Trade Center and the Pentagon. Normally available only to businesses in primary and adjacent disaster areas, the loans, which can be used as working capital to pay for fixed costs (but not to compensate for reduced revenue), carry an interest rate of 4 percent. The SBA also said businesses in the primary disaster areas would receive an extra 90 days to pay off existing economic injury and 7(a) loans.
Sen. John Kerry (D-MA) and Rep. Donald Manzullo (R-IL), chairs of the Senate and House Small Business Committees, respectively, created the American Small Business Emergency Relief and Recovery Act to provide broader relief, extending to businesses that might not qualify under the SBA initiative. The bill takes a tiered approach, with small businesses located physically in or around the World Trade Center eligible for disaster loans under more favorable terms.
Businesses located nowhere near Ground Zero whose operations were directly affected would be eligible for reduced-interest, deferred-payment 7(a) loans under the bill. Businesses in need of capital and investment financing, procurement assistance or management counseling would have access to a variety of special-incentive SBA programs. The Emergency Relief bill will probably pass Congress by the time you read this.
Stephen Barlas is a freelance business reporter who covers the Washington beat for 15 magazines.