The U.S. Department of Veterans Affairs (VA) doesn’t offer business loans. But there are many other VA Small Business loan options, whether from the Small Business Administration (SBA), traditional banks, online lenders, or credit unions.
The VA doesn’t have a small business loan program. Likewise, many small business lenders do not offer business loans specifically for veterans.
However, if you’re a veteran-owned business looking for funding, there are many other entrepreneurship resources available to help. Several banks and credit unions offer discounted rates or reduced fees on business loans. There are also government contracting and assistance programs available for veteran small businesses.
If you need funding to start or grow a business, here are some resources that offer support for veterans.
There are several reputable sources for veterans seeking business loans, each with its unique pros and cons and eligibility requirements. Below, we provide an overview of these sources so you can find the right lending source for your specific needs and business goals.
The SBA 7(a) loan program isn’t specific to veterans. Still, it can be a good resource for veteran entrepreneurs due to its high borrowing limits — the maximum loan amount is $5,000,000 — and flexibility in how the funds are used.
The SBA doesn’t lend money directly but guarantees a portion of the loan made by an SBA-approved lender, reducing the risk and making them more willing to lend to small businesses.
You can use an SBA 7(a) loan to:
An SBA Express loan is another type of loan backed by the SBA. Like SBA 7(a) loans, they’re not specific to veterans, and you can only access them through SBA-approved lenders. However, their appeal is that they offer an accelerated turnaround time, with applicants receiving a response from the SBA within 36 hours of application submission.
The maximum loan amount is $500,000.
The SBA microloan program provides loans of up to $50,000 to help small businesses and certain types of not-for-profit childcare centers cover start-up and expansion costs. Like other SBA loans, these microloans are backed by the SBA. However, nonprofit community lenders administer the program by managing loan applications and providing funding.
You can use an SBA microloan for:
You can’t use microloans to pay off existing debts or purchase real estate.
The Military Reservist Economic Injury Disaster Loan is an SBA-backed loan program designed to provide financial support to small businesses that cannot meet their operating expenses because an essential employee was called to active duty as a military reservist.
MREIDL offers a maximum loan amount of $2 million, with interest rates set at 4% and repayment terms extending up to 30 years. However, the amount a business can borrow is limited to the actual economic injury calculated by the SBA. They’re not designed to compensate for lost income or profits and can’t be used to refinance debts or expand the business.
Credit unions and traditional banks generally do not offer specific veteran business loans. However, some banks or credit unions may offer additional benefits or incentives to veteran-owned businesses, such as reduced interest rates or waived fees.
Here are a few to consider.
Online business loans are offered by lenders that operate primarily or exclusively over the internet. Online lending platforms often provide a streamlined and efficient application process and make comparing offers from multiple lenders easy. These loans can include working capital loans or short-term business loans with repayment terms extending from several months up to several years.
Navigating the process to get a business loan can seem daunting at first. However, when you understand the necessary steps involved and what each one entails, it becomes significantly more manageable. Below are some crucial steps to guide you toward a successful loan application process.
The Department of Veterans Affairs (VA) does not directly offer business loans. However, it does offer programs and partnerships, such as Boots to Business and the Women Veteran Entrepreneurship Training Program, that aid veterans in obtaining the financing they need.
The SBA Veterans Advantage business loan program, which reduced or eliminated fees on SBA 7(a) loans, was discontinued. However, SBA 7(a) loans are still available, and some SBA-approved lenders offer reduced or waived fees for veterans.
Business loan interest rates are set by the SBA-approved lenders issuing the loans. However, they are subject to SBA maximums.
Those maximum rates depend on the loan amount, loan term and either the prime rate, LIBOR rate or the optional SBA peg rate in effect when the loan is taken out. Currently, rates range from 3.0% to 6.5% plus the base rate on variable-rate loans and 5% to 8% on fixed-rate loans.
The SBA doesn’t set a minimum credit score — each lender can set their own minimum credit score requirements. However, having a credit score of 680 or higher gives you a better chance of getting approved for a loan.
Yes, getting a veteran business loan with bad credit is possible. Various lenders have different credit requirements — some are more lenient, and others are more strict. However, having a poor credit score can increase the difficulty of getting approved for a loan and may result in less favorable loan terms.
Obtaining startup business loans for veterans can be a challenge. However, the degree of difficulty varies based on several factors, including your personal and business credit score, cash flow and the strength of your business plan.
Fortunately, a variety of programs and initiatives are in place to support veteran entrepreneurs, including providing training, mentorship and help in creating a business plan.
