Economic Injury Disaster Loans For Small Business


U.S. Small Business Administration Publication DAD-3 (5/95 edition) The U.S. Small Business Administration (SBA), created by Congress in 1953, was given a mandate to provide financial assistance to victims of disasters. If, as a direct result of a physical disaster, or as the result of an agricultural production disaster, designated by the Secretary of Agriculture, your business has suffered substantial economic injury, with or without actual physical damage, you may be eligible to apply for an Economic Injury Disaster Loan (EIDL). Substantial economic injury is the inability of a business to meet its obligations as they mature and to pay its ordinary and necessary operating expenses. These loans, however, are limited to small businesses and to small agricultural cooperatives. The purpose of the loan is to permit you to meet necessary financial obligations which your business could have met had the disaster not occurred. EIDL's are working capital loans and are made only to provide relief from economic injury caused directly by the disaster and to permit you to maintain a reasonable working capital position during the period affected by the disaster. No EIDL assistance can be made to a business which is determined by SBA to be able to obtain credit elsewhere. EIDL assistance to businesses is limited to a maximum of $1,500,000 (together with any business physical disaster loan for damage from the same disaster). However, the actual amount of the loan will be based upon the business' actual economic injury and its financial needs. The interest rate on EIDL's may not exceed 4 percent per year. The term of these loans may not exceed 30 years. However, the actual term will be set depending upon the ability of the business to repay the loan.