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Need a Disaster Loan? It's Not Too Late

The SBA extends its deadline--again--for applying for Economic Injury Disaster Loans
2 min read
Opinions expressed by Entrepreneur contributors are their own.

Small businesses affected by the September 11 terrorist attacks have one last chance to apply for the SBA's Economic Injury Disaster Loans (EIDLs): The deadline, which has been extended twice thus far, is now May 22.

To qualify for an EIDL, a small business must prove substantial economic injury as a direct result of the terrorist attacks or a federal action taken in response to the attacks. The disaster loans are designed to provide eligible small businesses with the working capital needed to pay standard operating expenses--such as fixed debts, payroll and accounts payable--they are unable to pay as a result of the attacks.

Since September 11, the SBA has approved $715 million in disaster loans nationwide, according to the SBA. Of that, $380 million went to business owners and residents of the original declared disaster areas in New York City and Northern Virginia and the surrounding areas.

Small businesses can apply for a working capital loan of up to $1.5 million, at an interest rate of 4 percent with a maximum term of 30 years. The SBA determines the payment amount, the terms and the amount of economic injury for each business--so be prepared to present solid financial data proving your business's need for a disaster loan.

Businesses may also qualify for disaster relief under a separate program started in April, the SBA's Supplemental Terrorist Activity Relief (STAR) program, which has an additional $4.5 billion in funding for 7(a) loans available. Small businesses can apply for STAR loans--available until funds run out or January 2003--if they can show the lender direct or indirect adverse impact as a result of the terrorist attacks, such as:

  • 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
  • difficulty in securing financing

For an online application and instructions on applying for an EIDL, go to www.sba.gov/disaster/eidl.html. For information on the STAR program, call (800) U-ASK-SBA.

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