How to Get a Military Reservist Economic Injury Disaster Loan
What it is
| At a Glance | |
|---|---|
| Loan Type: | Disaster |
| Lender: | Government |
| Secured: | No |
A military reservist economic injury disaster loan is a loan that provides funds to eligible small businesses to meet ordinary and necessary operating expenses that could have been met previously, but cannot be met because an essential employee has been called to active duty in their role as a military reservist. These loans are only intended to provide working capital to a small business so that it can pay its necessary obligations as they mature until operations return to normal when the military reservist is released from active duty. This loan cannot be used to take the place of regular commercial debt, to refinance long term debt, or to expand the business.
Loans of $5,000 or less do not require collateral. Loans in excess of $5,000 require collateral to the extent that it is available. Personal guarantees by the principals of the business are also required. The SBA will not decline a loan for lack of collateral, but all available collateral must be pledged. The maximum interest rate for this loan is four percent and the maximum term is 30 years. The term is determined by each applicant's ability to repay the loan, because the installment payment amounts, determine the length of the term. Loans can reach as high as $1.5 million.
Who it's for
Many small businesses find themselves in need of a business loan at one time or another for a variety of reasons. If your small business has suffered because a military reservist was called to active duty, you may be eligible for financial assistance from the SBA through the military reservist economic injury disaster loan.
What you need to do to apply
In order to be approved for an SBA military reservist economic injury disaster loan, a small business must demonstrate that substantial economic injury has occurred. This means that the business is unable to meet its obligations as it matures and it cannot pay its ordinary and necessary operating expenses. Also, the applicant must be unable to obtain a loan from a commercial lender.
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