Loans, tax relief possible in wake of Hurricane Irene

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“I’m from the government and I’m here to help you,” may actually be true for dealers, marina operators and marine manufacturers hit hard when Hurricane Irene ripped up the East Coast. Marine businesses are among those that are eligible for some tax relief from the IRS and low-interest loans from the Small Business Association.

The first requirement for either is that the business is located in a declared federal disaster area. So far, such declarations have been made for an extensive list of counties in North Carolina, New Jersey, New York, Connecticut, Massachusetts, New Hampshire, Vermont and Pennsylvania (also Puerto Rico). The IRS says it expects to add more counties as damage assessments continue. (Updated list of counties at: www.IRS.gov.)

TAX RELIEF: Primarily, IRS is extending certain deadlines for filing and payments. Specifically, the tax filing and payment deadline for businesses (and individuals) in the disaster areas that got extensions until today (Sept. 15) of the March 15 deadline to file 2010 returns will now have until Oct. 31 to file. Sole proprietors and partnerships that got an extension of this year's April 18 filing deadline also now have until Oct. 31. Their returns had been due Oct. 17 so the extension isn’t much but still helpful. The Sept. 15 due date for quarterly estimated tax payments is also extended to Oct 31.

DISASTER LOANS: Businesses are eligible for two types of disaster loans -- a Physical Disaster Loan that provides funds to replace or repair business property, and an Economic Injury Disaster Loan to pay fixed operating expenses. These loans are for businesses of all sizes that don’t have insurance or for losses exceeding insurance limits. Here are more specifics:

The PDLs are limited to a maximum of $2 million. Interestingly, however, if the repairs also include installations that will protect the property from future damages, you may be able to borrow more. The interest rate for a PDL won’t exceed 4 percent if you can’t get credit elsewhere. If you can get credit, the SBA caps the rate at no more than 8 percent. The term can be up to 30 years, determined by your ability to repay.

The EIDLs do not replace lost sales or profits, but they are available to pay fixed operating expenses such as salaries, rent or mortgage interest and lease payments on equipment, for example. Notably, you can qualify for an EIDL even if you didn't have any physical damage. Remember, however, you must still be located in the disaster area. The EIDL’s are also limited to $2 million and the rate can’t exceed 4 percent. However, if you qualify for both a PDL and an EIDL, your aggregate limit is $2 million.

Reviewing: You can get a PDL and an EIDL even if you can't get credit elsewhere. As always, there is a caveat: the SBA will be the one to determine whether or not you're able to get credit. That may have you initially thinking “hassle and delay.” But, keep in mind disaster loans, by their nature, are considered by many to be significantly easier to navigate than other standard SBA loans. If you need help, don’t blow off this possibility without further investigation. More info at: www.SBA.gov.

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