The Northern Colorado Business Report recently reported that small businesses in Larimer County are entitled to apply for economic injury disaster loans from the United States Small Business Administration. Larimer is one of several Colorado counties where businesses may qualify for loans due to severe drought conditions as declared by Agriculture Secretary Tom Vilsack. The loans are intended to lessen the economic impact to businesses that have resulted from the disaster.
To qualify for the loans, businesses must be located in the declared disaster area and have suffered economic losses as the direct result of the drought. In addition, the losses sustained by the business must not already be covered by insurance. The SBA is tasked with determining the loan amount that any given businesses can qualify for with loans limited to the estimated economic injury sustained by the business. Most loans will be limited to $2 million even if the actual damages suffered by the business exceed that amount. However businesses that qualify as “major sources of employment” may, under certain conditions, qualify for loans exceeding the $2 million cap.
Repayment of the loans will be somewhat flexible with specific terms set by the SBA. Interest rates under the program will not exceed 4% and the term of the loans may extend up to 30 years. Loans of more than $5,000 will require the business to provide collateral for the loan. In setting the loan terms under the program, the SBA will consider the financial condition of the business.
If you would like to discuss legal issues facing your small business please contact our Business Law Group partner, David A. Closson at [email protected].