By Paul N. Gada, Business Owner's Toolkit Staff Writer

Since its inception in 1953, the Small Business Administration (SBA) has been helping American entrepreneurs form and run small businesses. More significantly in light of recent events, the SBA also can help small businesses, as well as others, rebuild after an unexpected disaster strikes.

In a true test of preparedness, the SBA quickly acted to help people deal with the aftermath of the terrorist attacks that occurred on September 11. The SBA partnered with the Federal Emergency Management Agency (FEMA); the American Red Cross; and other federal, state and local agencies to support residents of New York City and other areas impacted by the attacks. The SBA also sent personnel onsite to work in the Disaster Field Office set up by FEMA and the New York City Mayor's Office of Emergency Management (NYOEM).

The primary help that the SBA can offer during the recovery process in these areas is money provided through its various loan programs. The SBA has experienced loan officers in all the Disaster Recovery Centers located throughout the stricken areas to help business owners and individuals get on their feet again. For example, several centers are located throughout New York City and a center is located in Terminal A of Ronald Reagan Washington National Airport.

According to SBA spokesperson Carl N. Gaspari, the SBA loan officers have been kept busy processing loans. As of the morning of September 26, 2001, the SBA already has responded to over 5,200 requests for loan applications. The SBA also has been processing over 300 loan applications. Of those, 59 loan applications have been approved, with about $5.5 million distributed so far.

"The loan amounts already issued have varied from $1,000 to over $100,000," said Gaspari. "We are continuing to process the remaining applications as quickly as possible. We also expect to have sufficient financial resources to make any loans required."

SBA Loan Programs

Before looking at the specific types of loans offered by the SBA, it is important to clear up a popular misconception about SBA loans. Such loans are not just for small businesses. When a disaster occurs, the SBA also makes loans to businesses of all sizes, nonprofit organizations, homeowners and renters.

The three most common types of loans offered by the SBA after a disaster are:

• Home Disaster Loans -- Loans are provided to homeowners or renters to repair or replace disaster damages to real estate or personal property. Loan amounts are limited to $200,000 to repair or replace real estate and $40,000 to repair or replace personal property.
• Business Physical Disaster Loans -- Businesses of any size may receive loans to repair or replace damaged business property, including real estate, machinery, equipment, inventory and supplies. Non-profit organizations are also eligible for this relief. The maximum loan amount is $1.5 million, which may be waived if a business is a major source of employment.
• Economic Injury Disaster Loans (EIDLs) -- Low-interest loans for working capital are available to assist small businesses and agricultural cooperatives through the disaster recovery period. The only catch is that the loan applicant must not have any credit available elsewhere, except from government sources. The law sets a $1.5 million limit on an EIDL, which is further reduced by any compensation received from business interruption insurance.

Remember that these are loans, and the SBA expects the loans to be repaid. However, you have a maximum of up to 30 years to repay the loan. Also, the interest rates on the loans are relatively low and currently set at:

The SBA has declared that homeowners, renters and business owners in Bronx, Kings, New York, Queens and Richmond counties are eligible to apply for physical (i.e., business and home loans) and economic (i.e., EIDLs) disaster loans. EIDLs are also available to the neighboring counties of Nassau and Westchester in New York state, and Bergen, Hudson, Middlesex and Union in New Jersey.

Don't wait to apply for a loan because you might miss out entirely on this opportunity. The deadline for filing physical disaster loans is November 10, 2001. The deadline for filing EIDLs is June 11, 2002.

In addition to the above loans, the SBA also offers the Military Reservist Economic Injury Disaster Loan Program. This program provides loans to eligible small businesses to allow them to meet ordinary and necessary operating expenses that can't be met because a key employee is called to active military duty. Although not intended to replace lost profits, this type of loan can help keep a business open until the employee returns from military duty. A loan application can be submitted on the date the essential employee is ordered to active duty and up to 90 days after the employee is released from active duty.

Contact Information

To apply for these loans, contact the SBA at 1-800-659-2955. The SBA web site (http://www.sba.gov/disaster) also provides further information and updates on how to get help for this and other disasters.

Looking to the Future

The terrorist attacks on September 11 have tested us as a nation. Despite the devastation caused by these attacks, however, the American spirit to persevere and overcome adversity has not been destroyed. Whether seen in the heroic efforts of individuals, the generosity of the business community, or the unified response of our government, our country continues to show its resolve to meet any challenges caused by this horrible tragedy.

Small business owners trying to recover from the attack should keep in mind that they are the backbone of the American economy. As the SBA notes on its web site, small businesses create two of every three new jobs, produce 39 percent of the gross national product, and invent more than half our nation's technological innovation. Therefore, one of the best things you can do as a small business owner to help your country is to get back in business.

Related items:

Small Business Resources Help in Disaster Recovery

When Military Reservists Are Called Up from Your Small Business

IRS Filing Dates Postponed by Terror Attacks; Tax Relief Available for Those Affected