Help for Arizona’s self-employed military reservists

The U.S. Small Business Administration (SBA) offers help through its Military Reservist Economic Injury Disaster Loan Program (MREIDL).

by Bruce Hodgman — 

According to the Department of Defense, nearly seven percent of National Guard members are self-employed or run small businesses. With the ever increasing call-ups and extensions of reserve units, few reservist business owners knew how long they would be away from their businesses, much less how their companies would survive while they were gone.

The U.S. Small Business Administration (SBA) offers help through its Military Reservist Economic Injury Disaster Loan Program (MREIDL). Launched in August 2001 to support business owners and essential employees called up during the Kosovo conflict, the program was expanded several months later to include reservists called to active duty in Afghanistan and Iraq.

An essential employee is defined as an individual (whether or not an owner of the small business) whose managerial or technical expertise is critical to the successful daily operation of the small business.

These low-cost working capital loans provide the funds to help eligible small businesses cover operating costs that cannot be met due to the loss of an essential employee called up to active duty in the reserves or Arizona National Guard. The business must also demonstrate substantial economic injury caused by deployment of the key employee.

Substantial economic injury means the company must meet one or more of the following criteria:

  • Inability to meet financial obligations as they mature.
  • Inability to pay ordinary and necessary operating expenses.
  • Inability to market, produce or provide a service ordinarily marketed, produced or provided.

Small businesses may borrow up to $1.5 million to cover their obligations until after the employee is released from active duty. The amount a company can borrow is limited to the actual economic injury the business has suffered, as determined by the SBA. The interest rate on the loans is four percent, and the SBA will set the maturity of the loan after considering a company’s financial circumstances, up to a maximum of 30 years.

Like the SBA’s other disaster loans, small businesses are required to put up collateral if the loan is more than $5,000. The MREIDL filing period ends 90 days after the business owner or key employee is discharged from active duty and returns to the business.

Required documentation to apply for the loan includes a copy of the orders for active duty or a copy of the discharge papers; a statement indicating that the reservist is essential to the day-to-day operations of the company, along with a written concurrence by the employee; a written explanation and estimate of how the essential employee’s activation to military duty has or will cause economic injury to the company; a description of the steps the business is taking to alleviate the economic injury; and a certification from the small business owner that the essential employee will be offered the same or a similar position when he or she returns from active duty.

MREIDL applications can be downloaded from the SBA Web site at For Disaster Assistance programs, visit If you have unanswered questions, please call the SBA at 800-488-5323 or 916-735-1683 TTY.


Bruce Hodgman is the Deputy Director of the SBA in Arizona and is considered a disaster recovery specialist with nine years experience in disaster operations.

Reprinted from AzNetNews, Volume 26, Number 1, February/March 2007.

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