Are you an active-duty service member, National Guard member, Reservist, or the spouse or surviving spouse of one? Do you also want to start or grow a small business? You may qualify for the Veteran’s Advantage Program, a specialized program for SBA loans offered by the U.S. Small Business Administration (SBA). This SBA program is designed to reduce obstacles for veteran entrepreneurs and help them access affordable, secure funding.

The SBA has committed to improving the application experience, but you still need to do some things to qualify. Here’s what you should know about the process, the benefits offered by the program, and what to expect when approved.

What SBA loans are available through the SBA Veterans Advantage Program?

The SBA offers two types of financing to qualifying applicants under the SBA Veterans Advantage Program— SBA 7(a) loans, and SBA Express loans. 

SBA 7(a) loans are general purpose loans that can be used for many business needs, including working capital, real estate, and equipment. Read our guide to the SBA 7(a) program for specifics.

SBA Express loan is a smaller loan with faster approval time, and can be used for working capital and other immediate business needs. Read our guide to the SBA Express loan for maximum dollar amounts, use of proceeds, and more.

It’s important to note that there isn’t a specific veterans loan under the SBA program. Rather, prioritization and benefits are given to qualifying applicants on the existing SBA loan programs mentioned above.

Requirements for the SBA Veterans Advantage Program.

Beyond the general eligibility requirements that applicants must meet to qualify for an SBA loan, to qualify for the benefits of the Veterans Advantage Program, applicants are at least 51% owned by military members, veterans, or surviving spouses. This means they serve people who may not have success through other loan programs.

Here’s how the SBA defines an eligible veteran:

  • A person who served in the active military, naval, or air service (United States Army, Navy, Marine Corps, Air Force, and Coast Guard, or reserves for any).
  • Was discharged or released under conditions other than dishonorable. This includes retirement, and/or satisfactory completion of the period of active service for which the person was obligated at the time of entry.
  • If a person, due to enlistment or reenlistment, was not awarded a discharge or release from the period of service at the time of completion, would have been eligible for the award of a discharge or release other than dishonorable.

Also eligible are:

  • Service-disabled veterans
  • Active duty military service member participating in the Transition Assistance Program (TAP)
  • Spouse of a veteran, Active Duty service member, or widowed spouse of a service member who died while in service, or of a service-connected disability.

Core benefits of the SBA Veterans Advantage Program.

The core benefits of the Veterans Advantage program on SBA loans is lower costs. While SBA 7(a) loans are subject to guarantee fees, qualifying veterans, widows, or spouses enjoy waived guarantee fees on 7(a) loans under $150,000, and a smaller percentage on upfront guarantee fees for higher amounts compared to regular small business applicants.

The SBA also makes every effort to give special consideration to veterans in its loan programs. 

“SBA will prioritize processing applications from businesses that are owned by veterans when those loans are processed by SBA under non-delegated procedures. For loans processed under delegated procedures, SBA encourages Lenders to give special consideration to veterans during application processing.” - SBA SOP 50.10.8

Veterans also have the option to apply for an SBA Express loan, granting faster approval, no upfront fee, and potentially no collateral for smaller amounts. Like other SBA 7(a) loans, the Veterans Advantage loan program grants amounts of up to $5 million with repayment terms of up to 25 years (for real estate) and up to ten years for other uses.

Considering that these loan rates are very competitive compared to non-SBA loans, the program may be an excellent way for veterans to level up their businesses without incurring expensive interest costs.

Why lenders value veteran borrowers.

Veteran applicants may seem appealing for many reasons, in addition to any low financial risk or proven experience they may bring to the table. This group can be seen as having strong leadership backgrounds and a mission-driven mindset, which can lead to a disciplined financial approach, especially when running their businesses.

Well-documented military experience can help a loan application stand out and add context to the section that explains how the money will be used. That’s why it’s especially important to offer service history from the very beginning of the lender relationship.

How to prepare your application.

Knowing the SBA application process in advance gives you the chance to come fully prepared with all the information needed to complete forms quickly. Steps to take include:

1. Gather service documentation.

This includes the DD214 (Certificate of Release or Discharge from Active Duty) or equivalent. If you are still in service, provide a Statement of Service or other relevant proof. Spouses may want to ask the lender or SBA center for the exact qualification requirements.

2. Organize your supporting business documents.

These generally include:

  • Three years of personal and business tax returns, profit and loss statements, balance sheets, and cash flow projections
  • Copies of business licenses, registrations, and legal documents such as articles of incorporation or property leases
  • A comprehensive business plan that shows market analysis, revenue projections, overall operational strategy, and how you’ll use the loan money

Not only do these documents meet the requirements of the loan application, but they also show your readiness to partner with the lender. For some business owners, it’s also a wise strategy to get last-minute updates on the health of the business and how the loan funds can be spent wisely.

3. Check your personal and business credit scores.

Then, do what you can to clean them up. If you see any errors, have them corrected by contacting the credit reporting bureau or using their online dispute resolution form. Lenders naturally prefer higher scores, so consider paying down any debt you can or resolving any outstanding collections before you apply. Begin the process a few months ahead of meeting with a lender.

How these steps secure an SBA loan under the Veterans Advantage Program.

Each part of the process helps demonstrate your eligibility for the loan you’re applying for. For example, showing your service paperwork or discharge orders lets the lender know you have service member or veteran status, one of the most important parts of qualifying for this specific SBA loan program.

Having your documentation updated, organized, and in a format that’s easy for the lender to accept and review ensures they don’t have to ask for it again. It also demonstrates your ability to follow procedures and adhere to lender follow-ups after the loan has been paid to you.

With an eye on your credit, you won’t be surprised going into the application. It’s unlikely that you’ll waste time and energy collecting all the vital info just to learn that you fall far below what’s required for a loan approval. Remember, healthy credit scores reduce underwriting risk for the lenders, and they’ll be more likely to say, “yes” when the time comes!

How to use veterans' small business financing.

The SBA lays out rules for how the money can and can’t be used. The most common approved uses include:

  • Starting a business or purchasing a franchise
  • Expanding an existing business to new locations or through new product lines
  • Using it as working capital to pay vendors, maintain payroll, and hire new employees
  • Refinance high-interest loans so you can save money on interest each month

The SBA loan funds can be flexible, but you should still be very clear in your application on how you’ll use them. Lenders want to see that you have plans for the money, as it means you’ve considered it carefully and understand the best ways to grow your unique business.

Find the right SBA loan for you.

There are many lenders out there ready to partner with veterans for business expansion and economic growth. Could one be the right option for you? While these loans level the playing field for service-connected entrepreneurs, it can still take some time to complete the process. Apply through Lendio to find the right fit, and explore your funding options well in advance of your need.