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The purpose of the Military Reservist Economic Injury Disaster Loan program (MREIDL) is to provide funds to eligible small businesses to meet its ordinary and necessary operating expenses that it could have met, but is unable to meet, because an essential employee was “called-up” to active duty in their role as a military reservist. These loans are intended only to provide the amount of working capital needed by a small business to pay its necessary obligations as they mature until operations return to normal after the essential employee is released from active military duty. The purpose of these loans is not to cover lost income or lost profits. MREIDL funds cannot be used to take the place of regular commercial debt, to refinance long-term debt or to expand the business.
Federal law requires SBA to determine whether credit in an amount needed to accomplish full recovery is available from non-government sources without creating an undue financial hardship to the applicant. The law calls this credit available elsewhere. Because the Military Reservist economic injury loans are taxpayer subsidized, Congress intended that applicants with the financial capacity to fund their own recovery should do so and therefore are not eligible for MREIDL assistance.
Credit Requirements: SBA’s assistance is in the form of loans, as such SBA must have a reasonable assurance that such loans can and will be repaid.
Collateral Requirements: Collateral is required for all MREIDLs over $50,000. SBA takes real estate as collateral when it is available. SBA will not decline a loan for lack of collateral, but SBA will require the borrower to pledge collateral that is available.
The interest rate on MREIDL loans is no more than 4% per year. The maximum maturity for such business disaster loans is 30 years. However, the actual maturity is based on your ability to repay the loan. The maximum loan amount is $2.0 million.
Apply online for disaster loan assistance at your own convenience through SBA’s secure Disaster Loan Assistance website.
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A guide for US Government Federal and State Benefits published by benefits.gov
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