Small businesses that have suffered economic harm due to the drought disaster now declared in 32 states may be eligible for Economic Injury Disaster Loans available through the U.S. Small Business Administration (SBA).
The SBA's Economic Injury Disaster Loans (EIDL) loans of up to $2 million are available to small business, small agricultural cooperatives, small businesses engaged in aquaculture, or private, nonprofit organizations of any size that have suffered economic injury due to the drought. Businesses need not have suffered physical damage to be eligible for the loans.
According to the SBA, "economic injury" is the inability of a business to meet its obligations as they mature and to pay its ordinary and necessary operating expenses. The EIDL loans are intended provide the necessary working capital to help small businesses survive until normal operations resume after a disaster.
The loans are available only to small businesses or organizations that are determined by the SBA to be unable to obtain credit elsewhere.
Also See: Other SBA Small Business Loans
EIDL loans can be used to help small businesses meet the portions on their financial obligations and operating expenses which they have been prevented from meeting due to the drought. A detailed list of allowed uses of EIDL loans can be viewed on the SBA's Disaster Loans Use of Proceeds web page.
Interest rates on SBA disaster recovery loans will not exceed 14% per year. The term of the loans cannot exceed 30 years and are determined by the businesses' ability to repay them.
To be eligible for loans, businesses must be located in one of the more than 1,630 counties declared a drought disaster area by the SBA.
An updated list of counties declared drought disaster areas can be found on the SBA's current disaster declarations page. Information on how to apply for disaster recovery loans, including online applications, can be found on the SBA's Applying for a Disaster Loan web page.