The purpose of the expanded economic injury disaster loan program is to provide funds to eligible small businesses to meet its ordinary and necessary operating expenses that it could have met, but is unable to meet as a direct result of the destruction of the World Trade Center or damage to the Pentagon on September 11, 2001, or as a direct result of any Federal action taken between September 11, 2001 and the effective date (October 22, 2001) of the regulations implementing this program. These loans are intended only to provide the amount of working capital needed by a small business to pay its necessary operating expenses and obligations until operations return to normal. The purpose of these loans is not to cover lost income or lost profits, or losses attributable to an economic downturn. EIDL funds cannot be used to refinance long-term debt or to expand the business.

Federal law requires SBA to determine whether credit needed to accomplish full recovery is available from non-government sources without creating an undue financial hardship to the applicant. The law calls this credit available elsewhere. Generally, SBA determines that over 90 percent of disaster loan applicants do not have sufficient financial resources to recover without the assistance of the Federal government. Because economic injury loans are taxpayer subsidized, Congress intended that applicants with the financial capacity to fund their own recovery should do so and therefore are not eligible for EIDL assistance.

Credit Requirements: SBA’s assistance is in the form of loans, as such SBA must have a reasonable assurance that such loans can and will be repaid.

Collateral Requirements: Loans of $5,000 or less do not require collateral. Loans in excess of $5,000 require the pledging of collateral to the extent that it is available. Generally the collateral will consist of a first or second mortgage on the business property. SBA takes real estate as collateral where it is available. In addition, personal guaranties by the principals of the business are required. The SBA will not decline a loan for lack of collateral, but you must pledge available collateral.

Interest Rate: Interest rates are determined by formulas set by law and are recalculated quarterly. The maximum interest rate for this program is 4 percent.

Loan Term: The law authorizes loan terms up to a maximum of 30 years. SBA determines the term of each loan in accordance with the borrower's ability to repay. Based on the financial circumstances of each borrower, SBA determines an appropriate installment payment amount, which in turn determines the actual term.

Loan Amount Limit - $1,500,000. The actual amount of each loan, up to this maximum, is limited to the actual economic injury as calculated by SBA, not compensated by business interruption insurance or otherwise, and beyond the ability of the business and/or its owners to provide.

Insurance Requirements: To protect each borrower and SBA, SBA requires borrowers to obtain and maintain appropriate insurance. Borrowers of all secured loans (economic injury loans over $5,000) must purchase and maintain full hazard insurance for the life of the loan. Borrowers whose collateral property is located in a special flood hazard area must also purchase and maintain flood insurance for the full insurable value of the property for the life of the loan.

This program is for eligible small businesses located outside the declared disaster areas of the World Trade Center and the Pentagon. Any eligible small business that is unable to meet its financial obligations or pay its necessary operating expenses as a direct result of the terrorist attacks on September 11^th, or as a result of any related Federal action taken between September 11 and the effective date (October 22, 2001) of the regulations implementing this program may be eligible for assistance.

No. The resources of the business and its principals will be considered in determining the ability of the business to recover without the assistance of the Federal government.

Small businesses have until September 30, 2002 to apply.

The filing requirements are listed at the beginning of the application (SBA Form 5). In addition to the financial information required that you would normally submit for any loan, your application package must also include the following:

• 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 the small business experiencing substantial economic injury.

1. Your small business was located in an airport or other facility that was closed or suspended its operations or was otherwise disrupted as a result of national security as mandated by the Federal government; or
2. Your small business supplied or provided services to a business that was located in or near the World Trade Center or Pentagon; or
3. Your small business supplied or provided services to a business or industry adversely affected by the destruction of the World Trade Center or damage to the Pentagon on September 11, 2001 or Federal action; or is otherwise dependent on a business or industry so adversely impacted; or
4. Your small business is dependent upon a business or other organization that was closed or suspended its operations or was otherwise disrupted as a result of the destruction of the World Trade Center or damage to the Pentagon on September 11, 2001 attacks or Federal action; or
5. Your small business was directly impacted by the destruction of the World Trade Center or damage to the Pentagon on September 11, 2001 or related Federal actions taken in response to those actions between September 11 and October 22, 2001.

Please note that a general decline in business since September 11 is not eligible for this program unless it is the direct result of the destruction of the World Trade Center, damage to the Pentagon, or related Federal actions. A decline in revenue due to public reaction in the wake of September 11^th is not covered by this program.

Substantial economic injury means that your business either has been or will be adversely impacted by the destruction of the World Trade Center, the damage to the Pentagon, or a related Federal action, and that the business is (1) unable to meet its financial obligations as they mature, and (2) is unable to pay its ordinary and necessary operating expenses.

No. You cannot use the proceeds of an economic injury disaster loan to pay off or refinance debt. The money can only be used for operating expenses or to make payments on your debts until the business recovers.

That depends on when you file a complete SBA loan application. To make a loan, we must be satisfied that the business can repay the loan from its operations and take reasonable safeguards to help ensure that the loan is repaid. Since we process applications in the order received, the faster you return the application with all the needed information, the faster we can work on it. We try to make decisions on each application within 21 days. Be sure the information in your application is complete; missing information is the biggest cause of delay.

Upon approval of your loan request, we will send you loan closing documents describing all loan terms and conditions. Once we receive these documents, we can disburse the funds.

Serves: Connecticut, District of Columbia, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, Puerto Rico, Rhode Island, Vermont, Virgin Islands, Virginia and West Virginia

Serves: Alabama, Florida, Georgia, Illinois, Indiana, Kentucky, Michigan, Minnesota, Mississippi, North Carolina, Ohio, South Carolina, Tennessee and Wisconsin

Serves: Arkansas, Colorado, Iowa, Kansas, Louisiana, Missouri, Montana, Nebraska, New Mexico, North Dakota, Oklahoma, South Dakota, Texas, Utah and Wyoming

Serves: Alaska, American Samoa, Arizona, California, Guam, Hawaii, Idaho, Nevada, Oregon, Washington, Commonwealth of the Northern Mariana Islands, the Federated States of Micronesia and the Republic of the Marshall Islands.

(Rev. 06-27-02)