Military Loan

Sometimes, in life, duties conflict. That’s exactly what happens when an essential employee of a small business is called to active duty as a military reservist. In order to fulfill his or her duties to the country, the military reservist must temporarily put his or her duties to their job on hold. As an unfortunate result, the small business may suffer. A military loan called a Military Reservist Economic Injury Disaster Loan (MREIDL) is available to make sure small businesses in this situation don’t suffer too hard, or too long.

The Small Business Association defines an “essential employee” as “an individual (whether or not an owner of the small business) whose managerial or technical expertise is critical to the successful day-to-day operations of the small business.” When such an employee is ordered to active military duty, the small business owner is eligible to apply for an MREIDL military loan. The owner can apply during the period that begins on the date the employee is called to duty and ends 90 days after that date.

The MREIDL military loan provides funds to small businesses in this situation to cover operation expenses it could have met had the employee NOT been called to duty. (This means you can’t apply for this loan to cover extra expenses, or expenses not affected by the employee’s absence.) These military loans are meant only to supply the quantity of working capital required by a small business to cover its essential obligations until the essential employee returns from active military duty and the small business can resume normal operations. These military loans are NOT meant to replace lost income or profits, to pay off existing debts, or for business expansion purposes.

When you apply for this military loan, the SBA will first check your options for “credit elsewhere”—your eligibility for credit from non-government sources that can meet your needs without putting you in economic jeopardy. SBA findings typically reveal that over 90% of disaster loan applicants do not have adequate financial resources to recuperate without the aid of a military loan. These military loans are subsidized by taxpayers, so applicants with the financial means to fund their own recovery should do so and cannot receive MREIDL assistance.

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