13 C.F.R. Subpart D—Economic Injury Disaster Loans
Title 13 - Business Credit and Assistance
(a) If your business is located in a declared disaster area, and suffered substantial economic injury as a direct result of a declared disaster, you are eligible to apply for an economic injury disaster loan. (1) Substantial economic injury is such that a business concern is unable to meet its obligations as they mature or to pay its ordinary and necessary operating expenses. (2) Loss of anticipated profits or a drop in sales is not considered substantial economic injury for this purpose. (b) Economic injury disaster loans are available only if you were a small business (as defined in part 121 of this chapter) when the declared disaster commenced (except disaster declarations for Hurricanes Katrina, Rita, and Wilma, for which size status is determined as of the date SBA accepts the application for processing, and for applications submitted before December 6, 2005, whether denied because of size status or pending, such applications shall be deemed resubmitted on December 6, 2005), you and your affiliates and principal owners (20% or more ownership interest) have used all reasonably available funds, and you are unable to obtain credit elsewhere (see §123.104). (c) Eligible businesses do not include agricultural enterprises, but do include— (1) Small nurseries affected by a drought disaster designated by the Secretary of Agriculture (nurseries are commercial establishments deriving 50 percent or more of their annual receipts from the production and sale of ornamental plants and other nursery products, including, but not limited to, bulbs, florist greens, foliage, flowers, flower and vegetable seeds, shrubbery, and sod); (2) Small agricultural cooperatives; and (3) Producer cooperatives. [61 FR 3304, Jan. 31, 1996, as amended at 67 FR 11880, Mar. 15, 2002; 70 FR 72595, Dec. 6, 2005] Your business is not eligible for an economic disaster loan if you (or any principal of the business) fit into any of the categories in §§123.101 and 123.201, or if your business is: (a) Engaged in lending, multi-level sales distribution, speculation, or investment (except for real estate investment with property held for rental when the disaster occurred); (b) A non-profit or charitable concern; (c) A consumer or marketing cooperative; (d) Not a small business concern; or (e) Deriving more than one-third of gross annual revenue from legal gambling activities; (f) A loan packager which earns more than one-third of its gross annual revenue from packaging SBA loans; (g) Principally engaged in teaching, instructing, counseling, or indoctrinating religion or religious beliefs, whether in a religious or secular setting; or (h) Primarily engaged in political or lobbying activities. [61 FR 3304, Jan. 31, 1996, as amended at 63 FR 46644, Sept. 2, 1998] Your economic injury loan will have an interest rate of 4 percent per annum or less. (a) You can only use the loan proceeds for working capital necessary to carry your concern until resumption of normal operations and for expenditures necessary to alleviate the specific economic injury, but not to exceed that which the business could have provided had the injury not occurred. (b) Loan proceeds may not be used to: (1) Refinance indebtedness which you incurred prior to the disaster event; (2) Make payments on loans owned by another federal agency (including SBA) or a Small Business Investment Company licensed under the Small Business Investment Act; (3) Pay, directly or indirectly, any obligations resulting from a federal, state or local tax penalty as a result of negligence or fraud, or any non-tax criminal fine, civil fine, or penalty for non-compliance with a law, regulation, or order of a federal, state, regional, or local agency or similar matter; (4) Repair physical damage; or (5) Pay dividends or other disbursements to owners, partners, officers or stockholders, except for reasonable remuneration directly related to their performance of services for the business.
Title 13: Business Credit and Assistance
PART 123—DISASTER LOAN PROGRAM
Subpart D—Economic Injury Disaster Loans
§ 123.300 Is my business eligible to apply for an economic injury disaster loan?
§ 123.301 When would my business not be eligible to apply for an economic injury disaster loan?
§ 123.302 What is the interest rate on an economic injury disaster loan?
§ 123.303 How can my business spend my economic injury disaster loan?
