World Trade Center records folder, 2001

NYC 9/11 Public Portal Document

City of New York

Immediate Initiatives Recovery Loan Program

Objective: To enable financial institutions to make bridge loans to affected businesses awaiting SBA Disaster loan financing. The Program will rely on loan guarantees to provide backstop credit support for bank loans to businesses and not-for-profits that may not be eligible for SBA take-out. We request also that not-for-profits be granted eligibility for SBA Economic Injury loans. Initial funding for the Program will be provided by the City and State of New York, with Federal reimbursement of these amounts.

Program Description: The Recovery Loan Program will establish a loan guarantee fund to enable participating institutions to provide bridge loans to businesses affected by the WTC attack. It is expected that banks will be able to approve bridge loans within 3 days of application. Term loans and lines of credit, ranging up to $100,000, may be used for working capital, real estate, machinery and equipment, inventory and supplies. Most of these borrowers will eventually qualify for SBA Physical Disaster and Economic Injury loans. The immediate establishment of this Program will, however, allow banks to make bridge loans while loan applications are being reviewed by the SBA. The interest rate charged on these loans during the bridge period will match that offered by the SBA.

Eligibility: New York City-based commercial, industrial, retail enterprises and nonprofit corporations affected by the WTC disaster, and applying for Physical Disaster and Economic Injury loans from the SBA.

Cost: The Program will be established initially with a guarantee fund of $50 million, funded equally by the City and the State of New York. Federal reimbursement for this amount will be provided subsequently. With a 20% loan guarantee fund anticipated, a 5:1 leverage ratio will permit the banks to lend an initial amount of up to $250 million to affected businesses. The money will be recycled as the SBA "takes out" loans initiated under this Program, thereby increasing the total amount of credit available to affected companies.

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NYC-WTC 000136439