Program Description
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.
General Program Requirements
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.
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: Loans of $5,000 or less do not require collateral.
Loans in excess of $5,000 require the pledging of collateral to the extent
that it is available. Normally the collateral would consist of a first or
second mortgage on the business property. In addition, personal guaranties
by the principals of the business are required. The SBA will not decline a
loan for lack of collateral, but you must pledge available
collateral.
Loan Terms
Interest Rate cannot exceed 4% with no Upfront fees and variable
Pre-payment penalties. Maximum Loan Length 30 years. Maximum Loan Amount
$1.5 million. Monthly Payment Frequency.
Application Process
For more information, see the Program Contact Information below.
Program Contact Information
For more information about this program, please
visit:
http://www.sba.gov/aboutsba/sbaprograms/reservists/index.html
Managing Agency
U.S. Small Business Administration
www.sba.gov
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