For every 10 veterans in the United States, there is one veteran-owned small business.
If you’ve recently returned from duty, you might be looking to join those ranks.
Yet, the average cost to start a small business is around $5,000. That’s not even taking into account future costs, such as procuring new equipment, hiring employees and launching marketing campaigns.
You might not have that kind of money lying around to invest immediately. Moreover, lapses in your financial history due to active duty could make it difficult to apply for a traditional loan.
If this is the case, take heart. There are plenty of small business loans for veterans designed to help people who have walked in your boots.
Today, we’re discussing how these loans work and which resources are the best as you shop around for the best deal.
Ready to learn more? Let’s get started.
Startup Loans for Veterans
It’s less risky for lenders to do business with established, successful companies that already have a strong cash flow in place. Thus, it can be tricky to secure a loan for your small business startup, and even trickier if you’re a veteran.
The good news? There are ways to get the money you need if you’re willing to go a slightly unconventional route.
Rather than seeking funds directly for your startup, seek a personal business loan instead. Or, you can also apply for a business credit card to get you up and running.
In both of these scenarios, the loan is unsecured. This means you won’t have to back it with personal collateral, such as your home or another asset, to qualify. Let’s take a look at each in more detail.
Personal Business Loans
These are lump sum payments, delivered up-front in their entirety. You’ll negotiate terms with your lender, including a set interest rate and terms for repayment.
Business Credit Cards
These will normally provide around $50,000 in what’s known as revolving credit. You can borrow from this amount and pay it back on an as-needed basis, paying interest only on the funds you withdraw.
Economic Injury Disaster Loans
Are you a current or veteran reservist whose small business was disrupted when you were called into active duty? If so, this loan program could be for you.
Its official name is the Military Reservist Economic Injury Disaster Loan (MREIDL). You can learn the fine-print details here. It offers 4% interest loans with a 30-year maximum maturity designed to help your small business get back on its feet.
You’re eligible if you apply within one year of being released from your active duty. Keep in mind that if you’re seeking a loan for an amount greater than $50,000, you’ll need to put up collateral.
In addition, you’ll need to provide the U.S. Small Business Administration (SBA) with irrefutable proof that your business was severely impacted by your leave and cannot continue without government assistance.
StreetShares is a funding program that specializes in veteran loans.
Veteran-owned and operated, it operates as an online auction marketplace. On the platform, investors can connect directly with small business entrepreneurs whose visions align with theirs.
From there, interested investors bid against each other to earn your funding opportunity. The more they bid, the lower your rate drops.
When you apply for veteran business loans through StreetShares, you’ll connect with fellow service members who are passionate about helping you find the funding you need. They’ll walk you through the 10-minute, 3-step qualification and application process.
In some cases, veterans have found funding in a few hours or less. If you’re seeking a non-government resource for your small business needs, this can be an ideal place to start.
Veterans Business Fund
This is a relatively new 501(c)(3) nonprofit created to help lower the 3.7% unemployment rate among veterans.
It’s designed to supply veterans with the supplemental capital they need to get their small business ideas off the ground. Private donors provide the funds and those who choose to do receive a tax deduction.
Veterans can use the funds to create a new startup, expand an existing one or purchase a franchise.
According to the program terms, it’s designed to be as favorable and flexible as possible for business owners. To the greatest extent possible, the loans will be non-interest-bearing and repayment terms are scheduled in accordance with projected business needs.
While this can be an excellent way to round out your financing approach, keep in mind that you won’t be able to fully fund your endeavor through the Veterans Business Fund. You’ll also be required to have other funds in place, including your own personal equity and funding from an outside institution.
SBA 8(a) SDVOSB Contracting Program
Standing for Service-Disabled Veteran-Owned Small Business, the SBA 8(a) SDVOSB Contracting Program isn’t a traditional loan, but it does help veteran business owners get a leg up on the competition.
It works by setting aside a specific amount of government contracts for SDVOSB companies. This means there are jobs available for veterans only, helping your small business get the work (and funding) it needs for continued operation.
If your small business is at least 51% owned and controlled by one or more service-disabled veterans, give this opportunity a look.
SBA Express Loan Program
Ready to start funding your business, but don’t have the time to complete and file extensive paperwork? The SBA Express Loan Program takes the time and guesswork out of the process.
Featuring an accelerated turnaround time, the program provides an SBA credit decision as quickly as 36 hours after application, a step that can normally take up to 10 business days.
The maximum loan amount allowed under this program is $350,000. A huge perk is that all authorized veteran business loans secured through this initiative are freed from paying SBA guarantee fees. This waiver is a part of the greater SBA Veterans Advantage Program, discussed below.
VA SBA Loan
Through the SBA Veterans Advantage (VA) program, the SBA sets aside funds for businesses ran by reserved or honorably discharged veterans to achieve their small business goals. To qualify, yours must be at least 51% owned and controlled by such service members.
These VA loans often include specialized requirements and terms that set them apart from other financing provided through the SBA and other programs. Most notable are the fee reductions.
If you qualify and are approved for a VA business loan, the SBA will eliminate the upfront fees normally associated with its 7(a) loans of $125,000 or less. If you’re seeking a loan of $150,001 and $350,000, your fees will be 50% lower. The same applies for SBA Express loans of the same amount.
You won’t go directly through the SBA to receive this loan. Rather, you’ll work with your traditional lenders, such as your credit union or bank. The SBA will guarantee a portion of your loan in the event of a default.
Hivers and Strivers
Did you graduate from a military academy? If so, Hivers and Strivers is an angel investment group designed just for you.
It’s designed to help startup companies founded by graduates of the U.S. Military Academies. A single investment round could equal up to $1 million, making this worth a second look.
From the Air Force to the Coast Guard, the group supports graduates from all military branches. You can submit your startup idea directly on the website to start the process.
In addition to the small business loan programs listed above, there are also franchise companies that make it easier and more affordable for veterans to buy into their chains.
Two highlighted examples are 7-Eleven and Little Ceasar’s. Let’s take a closer look at each.
Veteran franchises under the 7-Eleven umbrella receive special benefits. Some of the main ones include:
- Up to 20% off the initial franchise fee (up to $50,000 in savings)
- Up to 65% financing directly from 7-Eleven
- Other special financing programs
These discounts alone serve as an interest-free loan and help those interested in pursuing business ownership get one step closer to realizing their dream.
Little Ceaser’s Franchise
Interested in opening up a Little Ceaser’s franchise? If you’re an honorably discharged veteran, the process can be quick and more cost-effective. Under its, the pizza chain offers the following benefits for service members:
- $5,000 off the initial franchise fee
- $5,000 off the first equipment purchase
- $30,000 in marketing materials and related supplies
If you’re a service-disabled veteran, those benefits are even greater. You could receive a full waiver of the initial franchise fee (a $20,000 savings) as well as $30,000 in other benefits.
Applying for Small Business Loans for Veterans
Specific application requirements and procedures will vary among the various funding options presented. Yet, when you’re ready to begin the application process, you’ll likely need a few standard items in hand.
Start by determining why you need a small business loan. Veteran loan lenders will want a detailed explanation of how you intend to use the capital. Simply stating that you need $50,000 won’t cut it.
This isn’t to disqualify you or make the process more difficult than it needs to be. Rather, this information can help lenders steer you in the direction of special loan opportunities that cater to your unique business requirements.
Are you looking to expand your operations from one store to two? Are you seeking a loan to consolidate your debt? Do you need to cover payroll for an upcoming busy season? Be specific and include concrete figures where you can. The more background you can provide, the better.
Then, before you move forward, gather the following data and make sure it’s up-to-date. Your lender will need these to determine your eligibility and set your loan terms.
- Your personal credit score
- Your business credit score
- Your most recent bank statements
- Your annual revenue
- Your work history and length of experience
- Your personal and business-related tax returns
- Company balance sheets and profit-loss statements
Once you have those documents and figures in hand, you’ll be better prepared to shop around for the best veteran business loans. Your next steps will be to compare interest rates and terms, find one that fits your needs and begin filling out the required paperwork, including your loan application and loan agreement.
Be sure to go through all the documents thoroughly to make sure you aren’t surprised by anything. For instance, if your credit is low, you may only qualify for loans that carry a high interest rate.
Be sure to double-check all figures, however, to make sure you aren’t agreeing to a rate that’s unnecessarily high, as doing so could harm your business. Along the same lines, look for hidden loan fees and other costs that could quickly add up to more than you can afford.
Find the Small Busines Financing You Need
Are you a veteran looking to own and operate your own business? This goal is attainable if you know where to look and which resources to use.
These small business loans for veterans are a great place to start. Take a closer look at the program requirements of each and see if you qualify. If not, there are other ways to fund your startup, franchise or other business opportunity.
Take a look at our business term loans to learn more. From equipment purchases to building expansions, our program is designed to help driven business leaders gain quick access to the cash they need to grow their vision.
Whether you need $50,000 or $500,000, you can gain access to the resources you require in as little as 48 hours. Apply now to get started and walk confidently in the direction of your dreams.[/vc_column_text][/vc_column][/vc_row]