Loans

What assistance does the U.S. Small Business Administration offer?

The U.S. Small Business Administration (SBA) assists businesses of all sizes, nonprofit organizations, homeowners and renters by providing low-interest, long-term disaster loans to repair or replace uninsured or underinsured disaster-damaged property. In addition, small businesses may be eligible for Economic Injury Disaster Loans (EIDLs). The SBA does not duplicate benefits of other agencies or insurance companies. All of the SBA's programs and services are provided to the public on a nondiscriminatory basis, and loans are made without regard to the applicant's age.

SBA Economic Injury Disaster Loan (EIDL): These loans provide working capital to small businesses to assist them through the disaster recovery period. They cover operating expenses (as opposed to physical damage) that the small business could have paid, if the disaster had not occurred. EIDLs are generally capped at $1.5 million. EIDLs are available only for small businesses located in declared disaster areas. The deadline for applying for an EIDL is June 11, 2002.

SBA Expanded Economic Injury Disaster Loan (Expanded EIDL): On October 22, 2001, the SBA announced that any small business across the country may file for an Expanded EIDL, as long as it can show how the destruction of the World Trade Center, the damage to the Pentagon, or a related federal action has resulted in its substantial economic injury. The deadline for applying for the Expanded EIDL is January 21, 2002. Otherwise, the Expanded EIDL is similar to the regular EIDL.

SBA Business Physical Disaster Loan (BPDL): These are loans to businesses of all sizes and to nonprofit organizations to repair or replace disaster damages to or loss of property, including real estate, machinery and equipment, inventory and supplies. BPDLs are capped at $1.5 million. Further, while you may receive both a BPDL and an EIDL, the combined assistance is capped at $1.5 million. The deadline for applying for a BPDL is currently January 9, 2002.

How do I apply for an SBA loan?

Businesses are urged to register with the Federal Emergency Management Agency (FEMA) by phone (800) 462-9029 or (800) 462-7585 (TTY) or apply in person at any disaster recovery center in New York City located at:

110 Maiden Lane (at 80 Pine St.), Monday through Friday, 9am to 6pm, Saturday 9am to pm;
633 Third Avenue (at East 41st), 32nd Floor, Monday through Friday, 9am to 6pm;
21 South End Ave., Monday through Friday, 9am to 6pm, Saturday 9am to 3pm;
62 Mott St., Monday through Friday, 9am to 6pm, Saturday 9am to 3pm; and
141 Worth St. (at Centre St.), Monday through Friday, 9am to 6 pm, Saturday 9am to 3pm.

Other SBA Disaster Area Offices are listed online at www.sba.gov/gopher/Disaster/dao.txt. For the office nearest you, look under "U.S. Government" in your telephone directory, or call (800) U-ASK-SBA (827-5722), Monday through Friday, 9 am to 5 pm, or (704) 344-6640 (TTY). You may also send a fax to (202) 481-6190 or send an email to answerdesk@sba.gov.

SBA Economic Injury Disaster Loans

Is my business eligible for an EIDL?

EIDLs are available only to a "small business" that has suffered "substantial economic injury," regardless of physical damage, and is located in a "declared disaster area," if neither the business nor its principals have credit available elsewhere. Nonprofits, religious organizations and individuals are not eligible for an EIDL.

A "small business" is one that is independently owned and operated and that is not dominant in its field of operation. The numerical definition of a small business varies from industry to industry, but is almost always stated in terms of either number of employees or average annual receipts. For industry size guidelines, see www.sba.gov/size/indextableofsize.html.

"Substantial economic injury" is the inability of a business to meet its obligations as they come due and to pay its ordinary and necessary operating expenses. Lack of profit or loss of anticipated sales alone are insufficient to establish substantial economic injury.

Small businesses located outside of a "declared disaster area" may be eligible for an Expanded EIDL.

If I can borrow from a bank, am I still eligible for an EIDL?

No. 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.

Must I sell assets that are not used in my regular business operations before I am eligible for an EIDL?

The SBA will review the availability of such assets to determine if part or all of the 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.

Are there any limitations on the use of an EIDL?

You may use an EIDL to make payments on short-term notes, accounts payable and installment payments on long-term notes, to the extent that you could have made these payments had the disaster not occurred. You may not use EIDL funds to pay cash dividends or bonuses, or for disbursements to owners, partners, officers or shareholders 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.

Must I pledge collateral or sign any personal guarantee to obtain an EIDL?

Loans of $5,000 or less do not require collateral. Loans in excess of $5,000 require you to pledge collateral to the extent that it is available. Normally, the collateral would consist of a first or second mortgage on the damaged business property. In addition, personal guarantees by the principals of a business are required. The SBA will not decline a loan for lack of collateral, but you must pledge available collateral.

Must I submit a personal financial statement with my loan application?

Yes. The SBA must review your financial statement and one for each partner, officer, director and stockholder with 20% or more ownership in your business.

What documents should I use to show my losses when applying for an EIDL?

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 both pre-disaster and post-disaster periods of time. The specific requirements are contained in the EIDL application form. If your business is located outside of the declared disaster area and you are applying for an Expanded EIDL, you should also include a written explanation of how the destruction of the World Trade Center, the damage to the Pentagon, or a related federal action has resulted in your business experiencing substantial economic injury. For more information about Expanded EIDLs see the recent SBA Expanded EIDL declaration online at www.sba.gov/news/current01/economicinjuryfactsheet.html.

What are the interest rates and maturity terms of an EIDL?

The maximum annual interest rate for EIDLs is 4% with terms of up to 30 years. The actual rate and maturity of an EIDL is determined by the SBA, based on your business needs and your ability to repay the loan. For more information see SBA Publication DA-3 online at www.sba.gov/gopher/Disaster/eidlall.txt.

Business Physical Disaster Loans

What is the deadline for applying for a BPDL?

The filing deadline for applications for a BPDL is currently January 9, 2002.

Are there any limitations on the use of a BPDL?

Yes. The physical disaster loans are intended to help you return your property to its pre-disaster condition and, under certain circumstances, for mitigating devices. Normally, SBA funds cannot be used to expand or upgrade a business. If, however, city or county building codes require such upgrading, then you can use the SBA loan for that purpose. A BPDL will be made for specific and designated purposes. The SBA requires that you obtain receipts and maintain good records of all loan expenditures as you restore your damaged property, and that you keep these receipts and records for three years. The penalty for misusing disaster funds is immediate repayment of one-and-a-half times the original amount of the loan.

I already have a mortgage on my business and I can't afford a disaster loan plus my current mortgage payment. Can the SBA refinance my mortgage?

In certain cases, yes. The SBA can refinance all or part of prior mortgages, evidenced by a recorded lien, if you:

do not have credit available elsewhere;
have suffered substantial uncompensated disaster damage (40% or more of the value of the property); and
intend to repair the damage.

Must I pledge collateral or sign any personal guarantee for a BPDL?

BPDLs of $10,000 or less do not require collateral. BPDLs in excess of $10,000 require that you pledge collateral to the extent it is available. Normally the collateral would consist of a first or second mortgage on the damaged business property. In addition, personal guarantees by the principals of a business are required for all BPDLs. The SBA will not decline a loan for lack of collateral, but you must pledge available collateral. What information should I include with my BPDL application?

The BPDL application form asks for the same information about your business and its principal owners and managers as is generally required for a bank loan. Necessary information is specified in the loan application and includes:

an itemized list of losses with your estimate of the repair or replacement cost of each item;
a copy of certain federal income tax information;
a brief history of the business; and
personal and business financial statements.

Must I submit a personal financial statement with my BPDL application?

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.

I had to remove debris from my property after the disaster. Can this expense be included in my BPDL application?

Yes, but your own labor and that of your family members cannot be included. Amounts paid to others and any equipment rental can be listed as part of repairs to real estate.

Should I hold up my BPDL application until I get a contractor's estimate for the cost of repairing damage to my business?

No. You might miss the January 9, 2002 deadline for filing your application by waiting for a contractor's estimate. If you have a contractor's estimate, include it; otherwise, include your own. The SBA will verify the damage estimate in your application. The sooner you file a complete application, the faster the SBA can process it.

Should I wait for my insurance settlement before I file my BPDL application?

No. Don't miss the filing deadline by waiting for an insurance settlement. The application should be returned to the SBA right away. Final insurance information can be added when a settlement is made. The SBA can approve a loan for the total replacement cost; however, you must assign the insurance proceeds to the SBA settlement.

If my business is completely destroyed, can the SBA lend me money for relocation?

Yes. In certain circumstances, limited relocation costs can be included in the loan amount. Whenever relocation is involved, you should contact the SBA disaster office before making any commitments. For more information BPDLs see SBA Publication DA-2 online at www.sba.gov/gopher/Disaster/pdball.txt.

General SBA Information

When will I know if I get the loan?

The SBA's goal is to decide on each application within 21 days from the date it has a complete application (missing information is the biggest cause of delay). The SBA processes applications in the order received, so be sure to submit a complete application as soon as you can. To make a loan, the SBA must estimate the cost of repairing the damage, be satisfied that the business can repay the loan from its operations and take reasonable safeguards to help ensure that the loan is repaid.

Is there a minimum monthly payment, and when would the first payment be due?

The SBA does not have a minimum monthly payment. Payments vary depending upon income and expenses, size of family and other circumstances that may affect your repayment ability. Generally, the first payment is not due until five months after the date of the loan.

What other SBA loans are available?

Disaster Assistance Loans for Homes and Personal Property: These are loans for homeowners or renters to repair damages to real estate or personal property owned by the victim. Homeowners may apply for a loan of up to $200,000 to restore their primary home to its pre-disaster condition. Renters are eligible for a loan of up to $40,000 for personal property losses only. The deadline for applying for these loans is currently January 9, 2002. See SBA Publication DA-1 online at www.sba.gov/gopher/Disaster/homeall.txt.

Military Reservist Economic Injury Disaster Loans: If your small business loses a key employee due to a reservist call-up, it may eligible for a Military Reservist Economic Injury Disaster Loan, to help it cover fixed debts, payroll, accounts payable, and other bills. Loans are available under the same terms as an EIDL. You can apply for a Military Reservist Economic Injury Disaster Loan from the date your employee is notified until 90 days following the employee's discharge. See SBA Publication DA-5 online at www.sba.gov/disaster/mreidlall.txt.

Where can I get more information about SBA loans?

For more information call the SBA at (800) 659-2955, visit the SBA website at www.sba.gov/disaster or see the New York Disaster Area Fact Sheets in English (www.sba.gov/disaster/newyorkfires.html) or Spanish (www.sba.gov/disaster/3364NYFactSheet (Spanish).txt).

Non-SBA Loans

What non-governmental loans are available until I get an SBA loan?

The WTC Disaster Recovery Loan Program will fund loans to small businesses and nonprofit corporations that have suffered economic injury or physical damage as a result of the WTC disaster. These loans will be available while your application for SBA Disaster Loan is pending. Under this program, participating banks will seek to fund WTC Disaster Recovery Loans within a few days of application. The WTC Disaster Recovery Loan Program is made possible by a guaranteed fund of $50 million, funded equally by the City of New York and New York State.

How much money may I borrow and are there any limitations on the use of a WTC Disaster Recovery Loan?

WTC Disaster Recovery Loans may be used for business-related purposes including working capital, real estate, machinery and equipment and physical rehabilitation. Businesses may qualify for up to $100,000. Banks are permitted to determine actual loan amounts using their own application forms and more relaxed lending criteria. Should a borrower not qualify for SBA assistance, banks may restructure these loans as term loans.

Who is eligible for WTC Disaster Recovery Loans?

New York City-based commercial, industrial, retail enterprises and nonprofit corporations that have been affected by the WTC disaster and are applying for disaster loans from the SBA.

Where can I apply for a WTC Disaster Recovery Loan?

Contact one of the participating banks below (for updates and additional banks see www.newyorkbiz.com/WTCloan):

Banco Popular (212) 445-1991;
Bank of New York (800) 621-3443;
Chase Bank (888) 842-8786;
Citibank, N.A. (800) 328-CITI (2484);
Community Capital Bank (718) 802-1212;
Fleet (212) 703-1504; or
HSBC Bank USA (800) 975-HSBC (4722)

You may also contact the Regional Economic Development Assistance Corporation (REDAC) Disaster Relief Business Loans, micro-lending for business and nonprofits at (718) 522-4600 ext.18 or ext.19.

For more information, see www.nycif.org/emergencyassistance.htm.

What other non-SBA loans are available?

The Brooklyn Economic Development Corporation has established two short-term loan programs to assist small businesses impacted by the disaster. For more information see www.bedc.org/redac.htm, call (718) 522-4600 or email to info@bedc.org.

The Renaissance Economic Development Corporation has established a working capital loan program to assist small businesses impacted by the disaster. They establish a walk-in center at 1 Pike Street New York, NY 10002. No appointments are necessary for the Emergency Loan Fund. For more information see www.renaissance-ny.org, call (212) 964-6022 or email to Info@renaissance-ny.org.

ACCION New York has established the "New York's American Dream Fund" to provide loans of up to $15,000 at 5% interest to businesses who (i) do not meet SBA requirements; (ii) are located south of 14th Street; or (iii) can demonstrate that at least 50% of the business' clients (or contracts) were located in the disaster area. For more information see www.accionnewyork.org, call (917) 620-0353/86, or (917) 543-6873, or email info@accion-ny.org. Loan officers are located at 110 Maiden Lane (at 80 Pine St.).

Structured Employment Economic Development Corporation (Seedco) provides financial and technical assistance to community-based organizations, including short-term loans and financing for non-profits and small businesses located below Canal Street. For more information see www.seedco.org, or call Catherine Gill at (212) 204-1301, Peter Oliver at (212) 204-1345, Betty Rauch at (212) 473-0255 ext. 322, or Ned Steele (212) 243-8383.

For information about Regional Economic Development Assistance Corporations (REDAC) Disaster Relief Business Loans, visit www.nycif.org/REDAC.htm or call (718) 522-4600 ext.18 or ext.19.