This form is an assumption agreement for a Small Business Administration (SBA) loan. Party assuming the loan agrees to continue payments thereon. SBA agrees to the assumption of the loan and release of original debtor. Adapt to fit your circumstances.
The Small Business Administration (SBA) Economic Injury Disaster Loan (IDL) program provides financial assistance to small businesses that have been affected by natural disasters, such as hurricanes, floods, or pandemics like COVID-19. These loans aim to help businesses overcome temporary economic challenges and maintain their operations during difficult times. The SBA IDL loan rules outline the eligibility criteria, loan amounts, interest rates, terms, and other aspects related to the loan program. It is important for small business owners to understand these rules before applying for the IDL loan. Here are some key points regarding the SBA IDL loan rules: 1. Eligibility: To qualify for an IDL, the business must be located in a declared disaster area and have suffered substantial economic injury due to the disaster. This includes businesses of all sizes, private non-profit organizations, and agricultural businesses. 2. Loan Amounts: The maximum loan amount for an IDL is $2 million. However, the loan amount is determined based on the actual economic injury suffered by the business, as calculated by the SBA. 3. Interest Rates: For most borrowers, the interest rate for Ends is fixed at a low rate, as determined by the SBA. As of 2021, the interest rate on new COVID-19 related IDL loans is 3.75% for businesses and 2.75% for non-profit organizations, with a repayment term of up to 30 years. 4. Use of Funds: The funds obtained through the IDL program can be used for various purposes, such as working capital, paying fixed debts, payroll, accounts payable, and other expenses that the business could have paid had the disaster not occurred. 5. Collateral and Credit Requirements: For loan amounts under $25,000, no collateral is required. For loans exceeding $25,000, general security interests may be taken. Additionally, while the SBA may require borrowers to provide collateral, it does not decline a loan solely on the basis of a lack of collateral. Similarly, the SBA takes into account the borrower's credit score during the approval process. 6. Repayment: IDL loans have long repayment terms, usually up to 30 years. The first payment is typically deferred for up to one year after the loan origination date. There are no prepayment penalties, meaning borrowers can pay off the loan ahead of schedule without incurring additional fees. It is important to note that the SBA IDL loan rules may differ for specific disaster events or circumstances. For instance, during the COVID-19 pandemic, there were additional loan provisions and programs such as the IDL Advance, which offered advances of up to $10,000 to eligible applicants. Understanding the SBA IDL loan rules and meeting the eligibility requirements is crucial for small businesses seeking financial assistance in times of economic distress. Additionally, seeking guidance from local SBA offices or consulting with financial advisors can provide further insights into the specific rules and requirements applicable to one's situation.
