Economic Injury Disaster Loans
Economic injury disaster loans are provided through the United States Small Business Administration for the purpose of supporting small business firms that have been damaged during a natural calamity or a physical disaster. Any small business firm that is located in a disaster declared region and has suffered substantial economic loss can avail financial assistance through this program.
An economic loss can be broadly defined as the inability of the firm to meet its obligations. This also includes the financial inability of the business to pay its monthly mortgage payments and its ordinary and necessary operating expenses. A natural disaster in a region can have a significant impact on the economical situation of small business firms. These firms can get themselves relieved from such disasters and meet their financial obligations through an economic injury disaster loan. Small agricultural cooperatives are also eligible for these loans.
Any business that is unable to obtain a loan or credit from anywhere else can apply for a financial assistance through this program. Through this program, a request can be made to SBA for providing finances that can suffice the economic injury and the operating expenses caused due to the disaster. While determining the eligibility of the loan and the amount of loan to be provided, SBA considers several factors. These include the operating expenses required during the period of disaster, overall debts and mortgage obligations, amount required to meet the working capital during the period of damage and also the expenses and the working capital that would have been present if the disaster had not occurred.
A business firm or a cooperative can avail a maximum amount of $1.5 million through this program. The repayment period generally extends up to 30 years. However, the interest rates on economic injury disaster loans cannot exceed 4 percent and includes variable pre-payment facilities and upfront fees.
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