Serving in the military is a great honor, but it can take years away from your career–time that could have been spent building a business. On top of that, veterans often have trouble accessing credit because they didn’t have the chance to build a robust credit file during their time in the military.
Veteran business owners and entrepreneurs looking for small business loans and additional support are in luck. Both the US Small Business Administration (SBA) and private lenders offer a number of small business loans and entrepreneurship training programs geared toward veterans that come with generous discounts or make the approval process easier. Here’s what you need to know about business loans for veterans.
The Best VA Small Business Loans
The US Small Business Administration offers affordable business loans, otherwise known as SBA loans, to encourage Americans to open small businesses. These loans are available to the general population, but if you’re a veteran, you may qualify for special terms such as lower rates and fees and additional support.
SBA Express Loan
The SBA Express program offers business loans of up to $350,000 with quick turnaround time. Veterans can qualify to withdraw these loans with no upfront fees, whereas regular SBA Express loans come with a 2% or 3% fee. Not only are these loans more affordable for veterans due to the lack of upfront fees, but they also come with business counseling and training to help you get your business off the ground.
Standard SBA 7(a) Loan
These loans are similar to SBA Express loans, except they have a longer turnaround time and can be offered in higher amounts. A standard SBA 7(a) loan has a maximum loan amount of $5 million. However, it would be difficult to qualify for a business loan that large, and most SBA loans are less than $350,000. Also, veterans do not qualify for a fee waiver under the Standard SBA 7(a) loan program as they do under the SBA Express loan program, so it’s usually better to go with the latter.
Military Reservist Economic Injury Disaster Loan
The SBA also offers disaster loans, including the Military Reservist Economic Injury Disaster Loan program (MREIDL). This loan is for business owners who are unable to meet their economic obligations because an essential employee was called up to active duty in the military. The loan is meant to fill any gaps in regular operating expenses until the essential employee returns to their position. While the extent of economic injury determines the loan amount, there is a maximum of $2 million available.
How to Get a VA Small Business Loans
Your business must be majority-owned (51% or more) by someone in one of the following groups to be eligible for any SBA veteran loan:
- Service-disabled veterans
- Active duty military members in the Transition Assistance Program
- National Guard members
- Spouse of any of the above
- Widowed spouse of a service member who died while in services
Furthermore, the business owner cannot have been discharged for dishonorable or bad conduct. You’ll need to provide additional documentation proving you are or were in the military to apply for an SBA loan and receive any veteran benefits associated with the loan such as fee waivers.
You’ll also need to meet all regular qualification requirements for SBA loans. These include having a credit score of at least 640 and sufficient collateral to back the loan.
Other Small Business Loans for Veterans
While the SBA loan program is a great option for veterans looking for secured, low-cost loans, they do have fairly strict credit requirements and might not be the best fit for everyone. Consider the following alternatives that also offer loans geared specifically toward veterans.
StreetShares is a business lender that caters to small businesses owned by veterans. They offer both secured and unsecured business loans and lines of credit of up to $250,000 at competitive rates and with quick turnaround times. While StreetShares does take your credit score into account, veterans with less-than-perfect credit or a slim credit file might have more luck applying for a loan through this veteran-geared lender than through a traditional bank.
Accion is an online lender that offers a variety of business loans, including veteran-owned business loans. Loans from Accion are offered in amounts ranging from $300 to $1,000,000 and come with reasonable interest rates, though they might be slightly more expensive than business loans from a traditional bank. One benefit of applying with Accion is that they consider several qualifying factors outside of your credit score, so you might have an easier time qualifying for their loans.
Hivers & Strivers
If you’re open to funding your business with investors rather than loans, Hivers & Strivers is worth considering. They’re an angel investment group made up of veterans who are looking to invest in early-stage start-ups founded by US Military Academy graduates. They usually invest anywhere from $250,000 to $1,000,000 in each funding round.
Boots to Business
Boots to Business is an entrepreneurship training program offered by the US Small Business Administration for veterans and active duty service members. You’ll start with an introductory course before moving into an online course delivered by Mississippi State University. Participants will also be granted access to business support resources through the US Small Business Administration.
Veteran Women Igniting the Spirit of Entrepreneurship
Veteran Women Igniting the Spirit of Entrepreneurship, or V-WISE, is a business and entrepreneurship training program for women veterans and women military spouses. The comprehensive program includes a 15-day online training, a 3-day entrepreneurship conference, and finally, access to valuable ongoing business support services, such as mentorship, financing opportunities, and skill-building.
Whether you’re starting a new business or hoping to grow your current business, taking advantage of these valuable opportunities could help you save money and boost your bottom line. Don’t pass them up.