The U.S. Small Business Administration (SBA) announced last week that it will make economic injury disaster loans (EIDL’s) available to small businesses and other qualifying organizations in Bergen County, New Jersey. Because Bergen County is adjacent to several New York counties that were designated disaster areas, it is eligible for inclusion in the program. The disaster designation came as a result of damage caused in August and September by Hurricane Irene and Tropical Storm Lee. The SBA’s disaster declaration accompanied a similar declaration from the U.S. Secretary of Agriculture. Loans are available to small businesses, aquaculture businesses, and agriculture cooperatives, as well as many private nonprofits.
Bergen County, in northeast New Jersey, is directly across the Hudson River from New York City. It is New Jersey’s most populous county, with more than 900,000 residents. Hurricane Irene hit the area in August 2011, followed by Tropical Storm Lee a few weeks later, and caused more than $60 million in damage to north New Jersey municipalities. Local businesses and other private property sustained as much as $200 million in damage. Authorities have called it one of the worst natural disasters in the state’s history. President Obama declared all twenty-one New Jersey counties to be eligible for disaster relief, with the Federal Emergency Management Agency (FEMA) covering much of the cost of repairing infrastructure and government buildings. The SBA’s disaster declaration now makes federal assistance available to area businesses hurt by the storms.
EIDL’s are available to certain businesses and organizations in disaster areas designated by the SBA or the Department of Agriculture. The purpose of an EIDL is to help a business recover from economic damage resulting from a physical disaster such as a hurricane or earthquake, and to maintain a “reasonable working capital position.” EIDL’s are only available to businesses that, in the SBA’s determination, cannot get credit from private sources. Loans are available up to $2 million, with interests rates not to exceed four percent. For nonprofit organizations, the interest rate is three percent. The term of an EIDL cannot be longer than thirty years. The SBA will review a business’ total amount of debt and its ability to repay its debts in determining the amount and term of a loan.
A business may use EIDL finds to pay ongoing operating expenses, including salaries and wages, or to make payments on other long- or short-term notes in the aftermath of a disaster. Businesses and organizations obtaining EIDL’s may not use the funds to cover lost receivables or profits, or to pay dividends or bonuses. The SBA will conduct an extensive review of the business’ financial situation, as well as that of the business’ principals. Businesses and their owners are required to utilize private resources, including their own assets, to the greatest extent possible before they may obtain an EIDL.
The New Jersey business attorneys at Samuel C. Berger, PC offer fixed-fee legal services to businesses and investors who want to do business in northern New Jersey and New York. To speak to a member of our skilled legal team, contact us today online or at (201) 587-1500.
More Blog Posts:
New Jersey Assembly Passes Bill Creating Small Business Loan Program, New York & New Jersey Business Lawyer Blog, December 13, 2011
Photo credit: Ayla87 on stock.xchg.