The Small Business Administration has many helpful platforms and programs that are specifically geared towards veterans who are looking to engage in entrepreneurship and start their own small businesses. One such program is the Military Reservist Economic Injury Disaster Loan program (MREIDL).
The purpose of the MREIDL program is to provide financing to small businesses to meet ordinary operating expenses that they would have been able to meet—but cannot currently do so—because a critical employee is away on active duty as a military reservist. This loan provides some of the necessary capital needed for the small business to continue running at the same level at which it did while the critical employee was still with the small business.
The financing will cease once the employee is released from duty and returns to the business. MREIDL funds are strictly for the purpose of helping the small business maintain its current cash flow, not expanding the business or covering any debts. MREIDL is generally reserved for businesses that will not be able to get by without financial assistance and do not have the financial capacity to recover on their own.
As with any loan, the SBA will review your loan application and the specifics of your business’s finances to ensure that the loan can and will be repaid in a timely fashion. Any MREIDLs in the amount of $50,000 or more will require the borrower to have collateral, such as real estate. The interest rate is 4%, and the loan term has a maximum of 30 years.
The SBA will decide the loan terms on a case-by-case basis, by evaluating the borrower’s financial situation and the ability to repay the loan. The loan limit is $2 million, but the actual amount will be calculated by the SBA upon evaluating the economic injury experienced by the small business due to the loss of the essential employee who is away on active military duty. In certain situations, however, the SBA can waive this limit (for example, if the business is a critical employer in its region).
Biz2Credit has a dedicated landing page to help veterans secure small business funding. Visit http://www.biz2credit.com/business-loans/veteran-loans.
This article was originally published by Biz2Credit