What is the Military Reservist Economic Injury Disaster Loan Program

The Military Reservist Economic Injury Disaster Loan program (MREIDL) is designed to provide funds to eligible small businesses so that they can meet their ordinary and necessary operating expenses in the absence of an essential employee who has been called up to active duty in their role as a military reservist.

The program recognizes that in the absence of a key employee, the business might be unable to meet its expenses and obligations, and the Military Reservist Economic Injury Disaster Loan Program steps in to fill this gap. The loans provided through this program are intended to help a small business until when the employee resumes their role at the business after being released from active military duty. The funds are not intended to cover lost income or lost profits, and cannot be used to take the place of regular commercial debt, to refinance long-term debt or expand the business. Rather, the funds are dedicated towards ensuring operations continue smoothly.

SBA is required by Federal law to determine whether the applicant can obtain the credit needed from non-government sources without creating undue financial hardship on the applicant. Military Reservist Economic Injury Disaster Loans are taxpayer subsidized and it was the intention of Congress to ensure that applicants that have the ability to meet its financial obligations privately do so first, instead of applying for this assistance.

Before you can obtain this loan from the SBA, an applicant must demonstrate the ability to repay the loan, per the agreed upon loan terms. For all MREIDLs above $50,000, collateral is required. When real estate is available, SBA will use real estate as collateral. Even if an applicant does not have real estate, SBA will not deny a loan for lack of collateral. However, an applicant will be required to pledge whatever collateral available before the loan can be made available.

The interest rate for MREIDLs does not exceed 4 percent per year. The maximum maturity period is 30 years, although this is based on the applicant’s ability to repay the loan. The maximum loan amount that can be given is $2 million.

If a business owner has employees who are in the military reserves, their absence can have an adverse impact on a small business, especially if the employee plays a critical role in the business. During their absence, the Military Reservist Economic Injury Disaster Loan program can provide vital financial assistance until such time as the employee resumes their duties.  “This is a vital loan program for businesses who need short-term financial help while key employees are serving their country,” explains Martin Chitwood, a decorated military veteran who was awarded both the Vietnamese Cross of Gallantry with Silver Star and the Vietnamese Cross of Gallantry with Palm by the Government of South Vietnam, and the Air Medal, Bronze Star Medal, Combat Infantryman’s Badge, and Vietnam Jump Wings by the Department of the Army.

If a business owner does not qualify for the Military Reservist Economic Injury Disaster Loan program, there are alternatives available for working capital.  A business cash advance or working capital loan from a lending and financing company, can provide financing for businesses to use for marketing and promotion, expansion, or even equipment upgrades, without requiring any collateral from the business owner or partners.