(NOTE: This program applies to military conflicts occurring or ending on or after March 24, 1999)
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
. Generally, SBA determines that over 90% of disaster
loan applicants do not have sufficient financial resources to recover without the assistance of the
federal government. 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.
The filing period for small businesses to apply for economic injury loan assistance begins on the date
the essential employee is ordered to active duty and ends 1 year after the essential employee is discharged
or released from active duty.
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 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 is 4.000%.
The law authorizes loan terms up to a maximum of 30 years. SBA determines the term of each loan in accordance
with the borrower's ability to repay. Based on the financial circumstances of each borrower, SBA determines
an appropriate installment payment amount, which in turn determines the actual term.
Loan Amount Limit
The actual amount of each loan, up to this maximum, is limited to the actual economic injury as calculated
by SBA, not compensated by business interruption insurance or otherwise, and beyond the ability of the
business and/or its owners to provide. If a business is a major source of employment, SBA has authority to
waive the $2,000,000 statutory limit.
To protect each borrower and the agency, SBA requires borrowers to obtain and maintain appropriate insurance.
Borrowers of all secured loans (over $50,000) must purchase and maintain hazard insurance for the life of the
loan on the collateral property. By law, borrowers whose collateral property is located in a special flood
hazard area must also purchase and maintain flood insurance for the full insurable value of the property
for the life of the loan.
Businesses may apply directly to the SBA for possible assistance. SBA will send an inspector to estimate
the cost of your damage once you have completed and returned your loan application.
SBA now offers you the option of filing your business disaster loan application electronically
application forms are available at: Apply for Assistance
For additional information, please contact our Customer Service Center. Call 1-800-659-2955 (TTY: 1-800-877-8339)
or e-mail email@example.com