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Government Updates

To all UMA Members:
Special Notice Regarding SBA Disaster Loan Programs
January 29, 2002

Changes in the U.S. Small Business Administration's (SBA) economic impact disaster loan (EIDL) program may just have significantly improved your company's chances of survival.

Just days ago, the President signed a defense appropriations bill which provides another $320 million to help small businesses who suffered losses from the September 11th attacks -- both directly and indirectly -- from the attacks. The new money and the EIDL program changes are sweeping enough to give many UMA members the breathing room they need to stay afloat as travelers come back to the highways.

While the SBA had previously extended EIDL nationwide application deadlines to June 11th (from the original January 21st deadline date), the agency has now been given the approval to allow borrowers to forego payment of principal or interest for a period of two years. Better still, interest will not accrue on loans during those first two years. The forgiveness period could help strapped owners meet their business obligations until more traditional spring travelers start coming back to the highways.

Small businesses located directly in the New York/Washington areas will have until March 11th to file for loan applications to cover actual physical damage from the attacks. All those applications are being handled by the Niagara Falls SBA office at (800) 659-2955.

Maximum loan size has also been increased under the legislation, from the $1.5-million cap of the original EIDL program to a maximum of $10-million under the new guidelines for those in the primary New York/Washington areas. The new funding bill also makes the SBA's 7(a) business loan programs available to those in the direct disaster area, providing money which can -- unlike the EIDL program -- be used for refinancing and restructuring of existing debts.

SBA field offices have also informed dozens of UMA operators who have already received EIDL loans that the bank will, essentially, stay open. Those who have successfully applied for help under the EIDL program will have the opportunity to go back for additional loans, if needed.

With the most recent changes, more and larger companies have also been brought under the SBA umbrella. Congress has allowed the agency to help companies with a maximum $6-million annual revenue, bumping that ceiling up from the SBA's historical $5-million revenue cap.

There's no question that the new SBA terms are an improvement, they continue to miss one key element that UMA and others have sought since last fall: an opportunity for distressed companies nationwide to use their low-cost SBA EIDL loans to refinance or restructure existing debts or to make the 7(a) program available nationwide. As such, UMA continues to support passage of S.1499 in the just-reconvened session of Congress. We urge you to continue to tell your members of the U.S. Senate and House of Representatives to support S.1499.

If you'd like to know more about the SBA's program, look online at the SBA's website: http://www.sba.gov/disaster. Or call us at 800-424-8262.