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NGExpert financial copywriter
Entrepreneurship is a natural path for many veterans. According to the U.S. Census Bureau, there are over 320,000 veteran-owned businesses in America, accounting for 5.6% of all employer businesses.
But for aspiring veteran and non-veteran business owners, securing capital to start or grow a business can be challenging.
Here, you’ll find different business loan options for veterans, including SBA loans, and information on what loan type can work best for your needs. We’ll also present details about loan eligibility requirements and how to apply for most business loans as a veteran.
Page written by Zoe Weisner. Last reviewed on August 12, 2024. Next review due October 1, 2025.
First, according to the Department of Veteran Affairs (VA), the VA does not offer any business loans. While there used to be an SBA loan specifically for active military members and veterans known as the Patriot Express Loan, it has unfortunately been discontinued.
With that said, there are many resources and programs specifically for veterans seeking guidance on how to run a business provided by the SBA. These organizations include:
You have plenty of lending options if you are a veteran entrepreneur seeking a loan from the SBA. A few of the most popular SBA loans for veterans are the SBA 7(a) loan and the SBA Express Loan, a subset of the SBA’s 7(a) loan program. The SBA 7(a) loan program encompasses five different types of loans. The most popular SBA loan is the standard 7(a) loan, which can be used to expand your business, purchase equipment, purchase real estate, or refinance existing debt. The standard 7(a) loan has a maximum loan limit of $5,000,000.
The express loan is the quicker version of the standard 7(a) loan, with an application turnaround time of 36 hours. The maximum loan amount for an express loan is half a million. Interest rates will vary depending on your loan amount. For loans under $50,000, interest rates will be the prime rate plus 6.5%. Loans over $50,000 will have interest rates around the prime rate plus 4.5%.
The eligibility requirements to receive an SBA loan will vary depending on the loan type lender, and your industry. If you are applying for an SBA 7(a) loan or the SBA Express loan, you’ll generally need to meet the following requirements:
To apply for an SBA loan, you’ll first need to choose a lender and get to know their application requirements. Every lender will have a different application process, so you must customize your application for each individual lender.
Once you’ve identified the lender you want to apply to, you’ll want to gather critical business documents. The most important document you’ll need is a business plan. A business plan can include your business model, marketing plan, sales forecast, customer demographic, and personal resume.
In addition to a business plan you must also have:
Once you’ve gathered your documents, you’ll want to submit your application to the lender. Traditional financial institutions such as your local bank will often take two to three months to process your application.
You can use the funds from your business loan for most business expenses. Examples of business expenses include refinancing debt, making payroll, purchasing equipment or supplies, operational expenses, purchasing a long-term fixed asset, or buying a business.
You may not use a business loan to make personal investments or to subsidize your relocation.
There are plenty of other alternative lending options for veteran business owners. You will find most of these loan types available from an online lender. Online lenders tend to have less stringent application requirements. Generally, they do not ask for high credit scores or strong revenue numbers. These are some of the most well-known alternative loan products:
A business line of credit works like a credit card. You get a fixed amount of money to draw from, which replenishes as you pay back the money you owe with interest. A business line of credit is if you need cash for payroll, inventory, or supplies.
It can be hard to maintain cash flow consistency if you have invoices with 30 or 60-day net terms. That’s why there are companies that offer invoice factoring, a service that allows you to “sell” your invoices in exchange for upfront funds.
A secured loan is a loan that is backed by collateral, which is typically some form of commercial real estate. Because a valuable asset backs a secured loan, you can usually get a bigger sum of money with lower interest rates. However, in the event you default on a loan, the lender may be able to take your collateral.
An alternative lender may be a better fit if you do not meet the stringent requirements for an SBA loan or if you need funding more immediately. Alternative lenders typically have a faster application turnaround time than an SBA loan–in some cases, you can get funding in less than 24 hours. However, alternative lenders tend to be more expensive than traditional bank loans, which means you need to pay close attention to interest rates, hidden fees, and certain provisions in your loan contract.
There are many national and local business grants for veteran-owned businesses. To find federal grants, Grants.Gov and GrantWatch are frequently updated with the latest grants available for veteran entrepreneurs.
There are also a few private grants for veterans, such as:
The SBA offers a free lender match tool that will point you in the direction of your nearest SBA lender based on your location. But that is only the beginning. If you are seeking an SBA loan, we recommend you find your nearest preferred SBA lender. Preferred lenders have the ability to approve a business loan on behalf of the SBA. Lenders that are not preferred by the SBA have two layers of approval, which can be time-consuming.
It’s also worth noting that some lenders specialize in helping service-disabled veterans qualify for prime government contracts.
As a veteran, you have a plethora of options when it comes to business financing. With Swoop’s digital platform and lending specialists, you can compare thousands of business loans and learn more about their eligibility requirements when you register with us.
Written by
Zoe is an experienced content marketer and freelance writer. For the past five years, she has written for several high-profile fintech startups such as BlueVine, Fundera, and Nerdwallet to help small business owners navigate through the world of small business financing. Today, Zoe writes about small business finance, business operations, and personal finance.
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