DATE: July 25, 2001
SUBJECT: Small Business Administration; Military Reservist Economic Injury Disaster Loans
SOURCE: Federal Register, July 25, 2001, Vol. 66, No. 143, page 38525
AGENCIES: Small Business Administration (SBA)
ACTION: Final Rule
SYNOPSIS: SBA is adding new regulations to implement a program authorized by the Veterans Entrepreneurship and Small Business Development Act of 1999 (Public Law 106-50), in which SBA will make a low interest, fixed rate loan available to a small business employing a military reservist if the reservist is called up to active military duty during a period of military conflict, the reservist is an essential employee critical to the success of the business' daily operation, and the reservist's call-up has caused or will cause the business substantial economic injury.
EDITOR'S NOTE: For more on the proposed rule, see the July 13, 2000, FEDERAL CONTRACTS DISPATCH "Small Business Administration; Military Reservist Economic Injury Disaster Loans."
EFFECTIVE DATE: August 24, 2001.
FOR FURTHER INFORMATION CONTACT: Herbert Mitchell, Associate Administrator, Office of Disaster Assistance, 202-205-6734.
SUPPLEMENTAL INFORMATION: Public Law 106-50, Section 402, Assistance to Active Duty Military Reservists, paragraph (b), Disaster Loan Assistance for Military Reservists' Small Businesses, authorizes the government to "make such disaster loans (either directly or in cooperation with banks or other lending institutions through agreements to participate on an immediate or deferred basis) to assist a small business concern that has suffered or that is likely to suffer substantial economic injury as the result of an essential employee of such small business concern being ordered to active military duty during a period of military conflict."
On July 13, 2000, SBA proposing to implement this provision by instituting the "Military Reservist Economic Injury Disaster Loan (EIDL)" program in Title 13 of the Code of Federal Regulations (CFR), Business and Credit Administration; Chapter 1, Small Business Administration; Part 123, Business Loans; as Subpart F, Military Reservist Economic Injury Disaster Loans. SBA did not receive any comments, so it is finalizing the proposed rule without substantive change (SBA did make a few minor textual and grammatical changes to clarify the meaning of several provisions).
To summarize the program, an eligible small business will be able to apply for an EIDL loan at an interest rate set by SBA quarterly (but no higher than 4%) if an essential employee (which may be a sole proprietor) is called up for reserve duty during a period of military conflict. The small business can borrow an amount equal to the economic injury suffered or likely to be suffered until normal operations resume because of the absence of the essential employee. The maximum amount a small business may borrow is $1,500,000, regardless of the number of essential employees called to active duty.
The following are the sections that constitute Subpart F:
|123.501||When is your business eligible to apply for a Military Reservist Economic Injury Disaster Loan (EIDL)?|
|123.502||When is your business ineligible to apply for a Military Reservist EIDL?|
|123.503||When can you apply for a Military Reservist EIDL?|
|123.504||How do you apply for a Military Reservist EIDL?|
|123.505||What if you are both an essential employee and the owner of the small business and you started active duty before applying for a Military Reservist EIDL?|
|123.506||How much can you borrow under the Military Reservist EIDL Program?|
|123.507||Under what circumstances will SBA consider waiving the $1.5 million loan limit?|
|123.508||How can you use Military Reservist EIDL funds?|
|123.509||What can't you use Military Reservist EIDL funds for?|
|123.510||What if you don't use your Military Reservist EIDL funds as authorized?|
|123.511||How will SBA disburse Military Reservist EIDL funds?|
|123.512||What is the interest rate on a Military Reservist EIDL?|
FOR FURTHER INFORMATION CONTACT: Panoptic Enterprises at 703-451-5953 or by e-mail to Panoptic@FedGovContracts.com.
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