Program helps businesses stricken by drought
October 15, 2012
SAN ANGELO, Texas — Even though the recent rains have reduced the anxiety, some businesses may still be feeling the effects of the drought period we are experiencing.
For those businesses that are struggling to meet short-term obligations because of the drought, there is a low interest loan program available. It is for businesses that have seen decreasing sales revenue because farmers and ranchers have reduced their purchases of goods and services during this period.
The Economic Injury Disaster Loan program is a direct loan from the U.S. Small Business Administration or SBA. It does not compete with local banks, as a business must be able to show they cannot receive credit elsewhere to be eligible, among other requirements. It is the only direct loan program from the SBA. Other SBA type loans are through banks or other lenders.
Currently every county in Texas, with the exceptions of Rockwall and Wise, is in a drought disaster declaration and businesses can apply for these low interest (maximum of 4 percent), direct loans if they meet the eligibility requirements. Another aspect of the loan program is the long payback term, which can be up to 30 years.
Proceeds from the loans can only be used for meeting short term expense obligations that a business is struggling to meet because of the drought and consequently reduced customer purchasing. In other words, they are working capital loans to help meet ordinary and necessary financial obligations that cannot be met as a direct result of the disaster. The loans are intended to assist through the recovery period.
For more information on Economic Injury Disaster Loans, or to see if your business is eligible, visit sba.gov/services/disasterassistance. To apply online for these loans visithttps://disasterloan.sba.gov/ela. The disaster release number is TX 13138-01. The application filing deadline is March 12, 2013.
As always, advisers at the ASU Small Business Development Center can assist with questions regarding this loan program and can help you apply. Feel free to email me to discuss your situation. The SBDC has in the past helped businesses receive these loans.
“Business Tips” was written by Dave Erickson, director and Certified Business Adviser IV, of Angelo State University’s Small Business Development Center. Contact him atDavid.Erickson@angelo.edu.