Small Business Loans for Veterans: The Complete Guide

Best Small Business Loans for Veterans

The SBA and SBA-approved lenders offer plenty of funding options for veterans. Let’s explore their top programs for veterans below.

SBA Veteran Advantage Loans

SBA Veteran Advantage Loans, available through SBA-approved banks and other traditional lenders, are business financing options specifically for veterans. The SBA guarantees up to 85% of the loan amount to the lender, helping reduce the risk if you fail to make payments.

The 7(a) is one of the most popular VA business loans), which provides funding for any business expenses. The 7(a) loan typically provides long terms and low interest rates, and can receive up to $5 million. Lenders may also waive or reduce all fees for veterans. That said, you’ll have to fill out a lot of paperwork.

Requirements:

Varies by lender, but you’ll generally need to meet the SBA size standards, have good consumer and business credit, and demonstrate your ability to repay the loan (like proving you have substantial cash flow).

Military Reservist Loan

The SBA’s Military Reservist Economic Injury Disaster Loan (MREIDL) program provides funding for businesses with a military reservist as an essential employee. The MREIDL program helps these businesses cover operating expenses when those military reservist employees are serving on active duty.

With an MREIDL, you can receive up to $2 million in loans with a 4% interest rate and a term of up to 30 years. The benefit is that it defers the first payment and interest for the first 12 months. The loan proceeds, however, must only be for operating expenses.

Requirements:

The SBA must determine that your business has insufficient funds, meaning it can’t fund its own recovery. The filing period can only occur from the date your essential employee receives active duty notice to one year after their release.

Traditional Business Loans

Many banks and credit unions offer small business loans for veterans, most of which also provide benefits for veteran applicants, such as military discounts. For example, Veterans can take advantage of a 25% discount on loan administration and origination fees with Bank of America’s SBA loan.

Requirements:

For most traditional lenders, your business must be a for-profit registered as a legal business entity, such as an LLC or sole proprietorship You have to be in business for at least six months and demonstrate proof of substantial annual revenue.

Alternative Business Funding for Veterans

Outside of the SBA, other lenders and programs assist veterans with starting their own businesses. For example, the VA offers business programs for veterans that give counsel, aid, and additional resources. Here are a few more funding alternatives to consider:

Grants

The best thing about grants is that you don’t have to repay them. The government and nonprofit organizations sponsor many veteran-specific grants. You can find and apply for grants through online portals such as Grants.gov, OpenGrants, and GrantWatch.

CDFI Funds

Financial resources for veterans are accessible through the Community Development Financial Institutions (CDFI) Fund, which works to support economically disadvantaged communities. You can find and contact a Certified CDFI lender through the CDFI Fund website.

Online Lenders

Online lenders are an increasingly popular alternative to traditional lenders, especially when you’re denied a loan. They typically have more lenient eligibility requirements, simpler loan applications, and faster funding. Online lenders can offer veterans funding through short-term business loans and business lines of credit.

Eligibility for Veteran-Owned Business Status

Before applying for a veteran business loan, make sure your business is veteran-owned certified. According to the SBA, your business may qualify as a veteran-owned business if it has at least 51% ownership by individuals in the following categories:

• Honorably discharged veterans
• Active Duty Military service member in the Transition Assistance Program
• Active Reservists and National Guard members
• Current spouse of any veteran/active-duty/reservist/guard member
• Widowed spouse of a service member who died in service or by a service-connected disability

Veteran Advantage Business Loan Application Requirements

As a veteran, the most important documents you’ll need to provide lenders are those demonstrating proof of your service history. Depending on your military service division and status, you should produce the following forms:

• DD Form 214 required for any veteran or military spouse
• DD Form 2 required for Reservists, National Guard members, and transitioning out of active duty
• DD Form 1173 required for spouses of transitioning military service members

Lenders also generally request submission of business ownership documentation, which typically includes any tax information, business licenses and certifications, financial statements, and a business plan.

Additional Resources for Veteran Business Owners

There are also training and online courses for veterans to use and connect with financial assistance. Below are a few more resources that support veteran business owners:

• Veteran Business Outreach Center (VBOC): A program through the SBA that offers resources to service members, veterans, and military spouses interested in small business ownership.
• Women Veterans Entrepreneurship Training (WVET): A program that offers training opportunities, workshops, and advisory services for women veterans who are small business owners.
• Boots to Business: SBA’s entrepreneurial education and training program, open to service members and military spouses.
• Service-Disabled Veteran Entrepreneurship Training Program (SDVETP): A funding program from government, private, and nonprofit organizations that award financing to service-disabled veteran small business owners.
• Office of Veterans Business Development: A liaison of the SBA that provides small business development services and programs to service members, veterans, and military families.
• Veteran Readiness & Employment Program (VR&E): A program through the VA that offers job training, employment resources, and business development assistance to veterans and service members.
• Warrior Rising: A nonprofit organization that provides training and assistance to veterans pursuing entrepreneurship.

Frequently Asked Questions

Secure Capital That Suits Your Business Needs

It takes time for any business owner to find and apply for the right loan. If you’re a veteran entrepreneur who needs funding, Clarify Capital can help. Our loan advisors do the heavy lifting for you, helping match you with lenders offering the lowest rates and flexible repayment schedules.