MREIDL: Operating Costs During an Essential Employee’s Military Service

MREIDL can provide working capital when an essential employee's military call-up leaves a small business unable to pay its ordinary operating expenses. The filing window opens when the employee receives notice of an expected call-up and closes one year after discharge or release from active duty. It is not one year from the call-up date.

Does the employee's absence qualify your business?

The Military Reservist Economic Injury Disaster Loan is a repayable SBA loan. Your business must be small, the employee must be essential to its operations, and the military absence must cause an actual inability to meet necessary financial obligations. A fall in sales alone does not establish the amount you can borrow.

Explain what the employee normally does and why the business cannot replace that work without the resulting financial injury. SBA also considers available business and owner funds, insurance, and whether suitable credit is available elsewhere without undue hardship. A business able to finance its own recovery does not qualify.

Nonprofits and businesses primarily engaged in agricultural production are excluded. Hiring an employee after call-up orders or notice that orders are imminent can also make the business ineligible because it assumed that risk. Confirm an unusual business type or mixed agricultural activity before relying on this loan.

Which expenses can the loan cover?

Eligible working capital can pay ordinary obligations such as rent, utilities, payroll, and other operating costs the business could have met without the employee's absence. The loan does not replace lost profits or personal income, finance expansion, or refinance long-term debt.

For a hypothetical month, suppose necessary bills total $18,000 and the business has $11,000 available to pay them after the call-up. The $7,000 gap is a starting point for documenting need, not an automatic loan award. Show the period affected and account for cash reserves, insurance, and other available resources.

Loan terms and repayment

• Amount: Normally up to $2 million, limited by the documented injury and financial need. A major source of employment may qualify for a waiver of that statutory cap.
• Interest: A fixed rate no higher than 4%. Confirm the actual rate in your offer.
• Initial relief: Current terms provide a 12-month first-payment deferral and no interest accrual during those first 12 months.
• Repayment: Up to 30 years, depending on ability to repay. There is no prepayment penalty.
• Collateral: Required for loans greater than $50,000. Lack of sufficient collateral alone does not require a decline, but you must pledge available collateral when required.

A long term can reduce monthly payments while increasing total interest. Before accepting, confirm the approved uses, payment start date, monthly amount, collateral, guarantees, and reporting duties.

Prepare and apply directly to SBA

1. Keep the expected-call-up notice, orders, and discharge or release documentation. Record both the opening date and the final filing date. You can begin during the employee's service rather than waiting for release.
2. Prepare business tax returns, current financial statements, bank records, a list of necessary expenses and debts, and a comparison of operations before and during the absence. Explain the employee's responsibilities and the costs or limitations of a replacement.
3. Use the SBA disaster loan application portal. Select the military-reservist assistance route and follow its document requests. This is a direct SBA application, not an application through an ordinary 7(a) lender.
4. Save the application number and submission confirmation. Respond to requests through the portal and keep copies of everything submitted.

If the reservist is released on December 15, 2026, the ordinary closing date is December 15, 2027, even if the call-up began much earlier. Use the actual service record to establish your deadline.

For help selecting the application or responding to a document request, call the SBA Disaster Assistance Customer Service Center at 800-659-2955. A local Small Business Development Center or SCORE counselor can help organize the business records.

After applying or receiving a decline

Submission does not make funds available immediately. Monitor the portal, complete any closing requirements, and use disbursed money only for authorized purposes. Keep expense records so you can show how the funds supported the business.

A decline should explain the reason. For most reasons other than business size, you may request reconsideration in writing with new information addressing that reason; SBA must receive it within six months of the decline notice. A size determination has a separate appeal process. If reconsideration is declined again, the ordinary written appeal deadline is 30 days. Follow the notice's destination and instructions.