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Business in a hurricane disaster area? Here’s SBA loan info

The most-visited item on the Small Business Administration's loan information website today is the Disaster Loan Application. SBA announced yesterday that various disaster recovery loan programs will become available to eligible applicants as disaster assessments and declarations are made.

President Obama has already declared disaster areas in New York, New Jersey, and Connecticut, and additional announcements are expected.

If your small business sustained physical damage or "economic injury" as a result of Hurricane Sandy, you may be eligible for SBA assistance. Businesses must submit loan applications directly to SBA in order to get an inspector to estimate damages. SBA says it strives to make decisions within 18 days, and advises against waiting for insurance settlements before applying for an SBA loan in order to avoid missing filing deadlines. The application-filing deadline for physical damage loans is December 31, 2012. The deadline for economic injury loans is July 31, 2013.

"If your business—regardless of size—is located in a declared disaster area, you may apply for a long-term, low-interest loan to repair or replace damaged property," according to SBA. "Even if your property was not damaged you may apply for a working capital loan from the SBA to relieve the economic injury caused by the disaster." Disaster loans are made to help restore property to pre-disaster condition, and, under certain circumstances, protect the structure from future disasters. Disaster loans may not be used to upgrade or expand a business unless required by local building codes.

Here is some of useful information from the Small Business Administration for owners whose businesses were in the path of Hurricane Sandy.

Disaster areas

In New York, the President's disaster declaration covers the counties of Bronx, Kings, Nassau, New York, Queens, Richmond and Suffolk. Businesses in those counties are eligible for both Physical and Economic Injury Disaster Loans from the SBA. Small businesses and most private non-profit organizations in Westchester County are eligible to apply only for SBA Economic Injury Disaster Loans.

In New Jersey, businesses in the counties of Atlantic, Cape May, Essex, Hudson, Middlesex, Monmouth, Ocean and Union are eligible for both Physical and Economic Injury Disaster Loans from the SBA. Small businesses and most private non-profit organizations in the adjacent counties of Bergen, Burlington, Camden, Cumberland, Gloucester, Mercer, Morris, Passaic, Somerset are eligible to apply only for Economic Injury Disaster Loans.

In Connecticut, Fairfield, Middlesex, New Haven, and New London County businesses (including those in the Mashantucket Pequot and Mohegan Tribal Nations within New London County), are eligible to apply for physical damage and economic injury loans. Hartford, Litchfield, Tolland, and Windham County businesses are eligible to apply for economic injury loans.

In Rhode Island, businesses in the Connecticut-adjacent counties of Kent and Washington may apply for economic injury loans.

Loan types

Physical Disaster Loans: Businesses of all sizes and private, nonprofit organizations may apply for a Physical Disaster Loan of up to $2 million to repair or replace damaged real estate, equipment, inventory and fixtures. The loan may be increased by as much as 20 percent of the total amount of disaster damage to real estate and/or leasehold improvements, as verified by SBA, to protect the property against future disasters of the same type. These loans will cover uninsured or under-insured losses. Interest rates will not exceed 4 percent if you do not have credit available elsewhere—6 percent if SBA determines that you do—with repayment terms up to 30 years.

Economic Injury Loans: Small businesses, small agricultural cooperatives, small businesses engaged in aquaculture, and most private, nonprofit organizations of all sizes suffering substantial economic injury may be eligible for an Economic Injury Disaster Loan of up to $2 million, at the same rate and term conditions as physical disaster loans, to meet necessary financial obligations — expenses the business would have paid if the disaster had not occurred.

Disaster loan applicants must provide current financial information such as a personal financial statement, a current profit-and-loss statement, balance sheet and a list of debts, as well as IRS form 8821 to permit the IRS to provide the SBA tax return information

What if you've had enough of doing business in a hurricane zone? You may use your SBA disaster loan to relocate.

File a business disaster loan application electronically or call SBA's disaster assistance center at (800) 659-2955.

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