SBA loans can help firms hurt by military call-ups

The U. S. Small Business Administra-tion will make low interest loans available to small businesses employing military reservists called to active duty during military conflict, provided he or she is an essential employee critical to the success of the business's daily operation.

According to a news release from the SBA, if the absence of the reservist employee causes the business "substantial economic injury," the business owner can apply for a Military Reservist Economic Injury Disaster Loan through the SBA's disaster offices.

"The loss of a key person even for a short time can devastate any small company. Small businesses sometimes fail when such an employee is called away to military service," said SBA Administra-tor Hector V. Barreto. "This program will provide economic support for those businesses, which in some cases are the major source of jobs in those communities. We must do all we can to protect these companies"

Small businesses meeting all the eligibility requirements have until Nov. 24 to apply for a loan. Otherwise, the filing period begins the date the essential employee is ordered to active duty and ends 90 days after the date the employee is discharged from active duty.

The maximum interest rate for the loan program is 4 percent, with terms up to a maximum of 30 years. The SBA will determine the term of each loan and the installment payment amount, based on the circumstances of each borrower.

Loans are capped at $1.5 million, based on the actual economic injury not covered by insurance, as calculated by the SBA. If the business is a major source of employment in the community, the SBA can waive the $1.5 million limit.

The SBA requires borrowers to purchase and maintain full hazard insurance for the life of the loan. Borrowers whose property is located in a special flood hazard area must purchase flood insurance for the full value of the property.

Local businesses interested in applying for an economic injury disaster loan can contact the SBA disaster area office to obtain an application at 1-800-366-6303.