The Patriot Express Loan Program: Everything You Need to Know

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What Is the Patriot Express Loan Program?

Patriot Express loans were designed to help veterans and active-duty military personnel gain faster access to capital for their businesses, providing small business loans in amounts up to $500,000. Unfortunately, the Patriot Express loan program expired in 2013.

However, in just the first four years of the SBA Patriot Express loan program’s existence, it funded over $663 million in SBA-guaranteed loans to 7,650 veterans who needed financing to start or expand their small businesses. Overall, it’s safe to say that this program was a very popular option for entrepreneurial veterans.

So, with this in mind, you may be wondering: How did the Patriot Express loan program work and why was it discontinued?

We’re here to explain just that—plus, we’ll break down the top SBA alternatives for veterans in need of funding for their businesses.

Let’s get started.

Background on the Patriot Express Loan

As we mentioned, the Patriot Express loan program was an SBA initiative designed to help veterans start or grow their businesses. This program was launched in 2007, to expand upon the funding the SBA already guaranteed for veteran business owners across their other loan programs.

Essentially, the Patriot Express loan worked much like SBA loans work today. A business owner would work with a lender that would provide funding that was guaranteed by the SBA. The main difference between the Patriot Express loan and any other current SBA loan is that to qualify for the Patriot Express loan, you had to not only meet the qualifications as a business, but your business also had to be owned by veterans, service-disabled veterans, active-duty members of the military in the Transition Assistance Program (TAP), National Guard members, or reservists.

The Patriot Express loan program offered loan amounts up to $500,000, with low interest rates and fees (and sometimes none at all). Initially, the guarantee fee for an SBA Patriot Express loan was 3% when you secured a loan between $150,001 and $350,000, but this was later reduced to 0%. The Patriot Express loan program had a streamlined application and approval process—meaning that veterans could be approved for the financing they needed in as little as 36 hours.

Business owners who qualified for and received a Patriot Express loan could use the funds for a variety of purposes—including start-up, expansion, equipment purchases, working capital, real estate purchases, inventory purchases, and more.

So, why was this SBA loan program discontinued? Ultimately, in a 2013 report, the U.S. Government Accountability Office found that Patriot Express loans were defaulting at a higher rate than other SBA loans, and therefore, losses for this program were exceeding its income. The SBA then terminated the program in 2013.

Top Alternatives to the Patriot Express Loan Program

With this background information in mind, you’re likely wondering what the best options are for veteran business loans now that the Patriot Express loan program no longer exists.

Ultimately, some of the top financing solutions for veterans are still SBA loans. Even though they no longer offer this program designed specifically for veterans, the existing SBA loan programs can well serve a variety of veteran business owners.

On the whole, veteran business owners may consider any of the following SBA loan programs:

  • SBA 7(a) loans
  • SBA Express loans
  • SBA microloans
  • SBA CDC/504 loans

Let’s discuss these options further:

SBA Loan Programs

If you’re looking for an alternative to the Patriot Express loan, you’ll want to consider any of the SBA programs we just listed above. What are the differences between these programs?

First, the SBA 7(a) loan program is the most popular of the SBA programs. With this type of SBA loan, veterans (as well as non-veterans) can apply for amounts up to $5 million to finance almost any business need. SBA 7(a) loans have long terms, ranging from 10 to 25 years, and affordable interest-rates. Additionally, through the SBA’s Veterans Advantage Program, the guarantee fee is waived for veterans who receive 7(a) loans of $125,000 or less. The SBA also offers a 50% reduction of this fee for loans greater than $125,000 and up to $350,000.

Within this program, which houses a variety of loan types, there is the SBA Express loan, which is actually very similar to the Patriot Express loan. With an SBA Express loan, veterans (and non-veterans) can receive up to $350,000 in funding with a faster application and approval process. Additionally, the guarantee fee is completely waived with this SBA loan for veterans, reservists, national guard members, and their spouses.

Next, veterans who only need a small amount of financing might consider the SBA microloan program. This program provides loans in amounts up to $50,000 with repayment terms up to six years. These loans are designed to accommodate businesses that are just starting out. Like any SBA loan, you’ll see affordable interest rates with these microloans and there are no fees with this program.

Finally, if you’re looking to purchase real estate or other fixed assets, you’ll want to explore the SBA 504/CDC program. With this program, you’ll be restricted in what you can use the funds for (namely real estate or large equipment purchases), but you’ll be able to receive up to $5.5 million with repayment terms of 10 to 25 years. Although the 504/CDC loan is a little more complicated than the other SBA loans—as it requires working with a lender and a certified development company (CDC)—you’ll find some of the most affordable interest rates with this real estate-specific loan.

How to Qualify for an SBA Loan

So, if you decide one of these top SBA Patriot Express loan alternatives is right for your business, you’ll likely want to know how to qualify.

Ultimately, there are certain SBA loan requirements that the SBA designates; however, you’ll also have to meet the qualifications of your lender, as well as any that are specific to the program you’re applying to.

On a very basic level, to qualify for an SBA loan you should:

  • Be a for-profit business in an eligible industry
  • Be based in the U.S.
  • Be a “small business” by SBA standards
  • Have invested your own time or money into your business
  • Have considered other financing options before turning to SBA loans

Moreover, on top of these base-level qualifications, you’ll very likely need to provide the following information when applying for an SBA loan:

    Personal and Business Background

    When you apply for an SBA loan, you’ll need to provide a document explaining your personal background. You’ll probably need to provide previous addresses, names you’ve used, educational background, criminal history, etc.

    You should also prepare a resume that explains your business background. The SBA and the lender you work with will want to see your past experience as a business owner, and any experience you’ve had working in your industry.

    If you’re a veteran applying to an SBA Express loan in lieu of the Patriot Express loan, you should also describe your military experience and current involvement in your resume.

    Business Plan

    When it comes to small business loan requirements, your business plan is your time to shine.

    You know how successful your business will be, but your lender doesn’t. Your business plan is your chance to fill them in on why lending to your company is a smart investment.

    When you put together your business plan for your SBA loan application, make sure that you include both financial estimations—future sales, revenue, cash flow, etc.—and qualitative goals. Why is your business unique and important? What will it look like in the next five years?

    Use of Loan

    Although it might seem obvious, your SBA lender will want to know how you plan on using the loan—your eligibility for the different SBA loan programs will depend on it.

    As we mentioned, with the 7(a) and microloan programs, you’ll be able to use the funds for a variety of needs—but with the SBA 504/CDC loan program, on the other hand, you’ll be restricted to real estate or fixed asset purchases.

    More specifically, you can use a 7(a) loan for:

    • Working capital
    • Seasonal financing
    • Construction costs
    • Equipment purchases
    • Real estate purchases
    • Construction projects
    • Establish or buy a business
    • Refinance existing business debt (sometimes)

    You can’t, however, use a 7(a) loan to repay delinquent taxes, finance a change in ownership, or reimburse previous business owners.

    Personal and Business Credit Report

    Your credit rating will play a role in any small business loan you apply for, but it’s especially important for your SBA loan application.

    The SBA is guaranteeing part of your loan, so they’ll want to evaluate your borrowing history to see how likely you are to default on the loan.

    Therefore, to make sure they’re working with the most responsible borrowers, you’ll need to prove your creditworthiness with both your personal and business credit scores.

    So, before you try to get an SBA loan, you’ll want to know where your credit score stands.

    Financial Information

    There are a number of documents lenders will need to see to verify your business’s financials when you apply for an SBA loan.

    In general, you’ll probably need to at least put the following information together for your loan application:

    • Personal and business tax returns
    • Balance sheets
    • Profit and loss statements
    • Business debt schedule

    Collateral

    You won’t need to provide a collateral valuation for every SBA loan you apply for, but you should be prepared to put together a document that states the value of the collateral you have to offer.

    SBA loans are almost always secured business loans, so don’t be surprised if you need to put some of your assets on the line in the form of collateral.

SBA Resources for Veteran Business Owners

As you can see, although the SBA no longer offers the Patriot Express loan program, this government agency still provides some of the best options for veterans looking for business loans.

In addition to their VA small business loans, the SBA offers some other resources that may be helpful for veteran business owners.

Let’s learn more.

    Office of Veterans Business Development

    The SBA recognizes how important veteran-owned small businesses are to the U.S. economy, so they’ve developed a number of programs and services to support and aid veteran entrepreneurs—and their spouses.

    The Office of Veterans Business Development provides valuable training, mentorship, and access to capital.

    Boots to Business

    If you could use some tips on operating and running your small business, check out this two-step entrepreneurial program.

    The SBA offers the Boots to Business program on military establishments around the world as a part of the Transition Assistance Program.

    Veterans Women Igniting the Spirit of Entrepreneurship (V-WISE)

    This program is funded by the SBA, and provided by the Institution for Veterans and Military Families.

    If you get involved with the V-Wise program, you can take part in online training and mentoring programs that help empower women veterans and female military spouses.

    Veterans Business Outreach Center (VBOC)

    The VBOC is one of the best SBA resources available for veteran small business owners.

    The SBA operates 22 local centers in 10 different regions in the U.S. Through its local centers, the program provides numerous entrepreneurial development assistance services, such as business training, mentoring, and counseling for eligible veteran-owned businesses—or veterans who want to start a small business.

    Many people prefer to develop their small businesses on a face-to-face basis as opposed to using online programs and development. If you’d rather work on growing your small business in person, a Veterans Business Outreach Center is a great option that can meet your development needs.

    SBA Veterans Advantage

    Similar to the Patriot Express loan program, the SBA Veterans Advantage program guarantees loans for small businesses owned by veterans or military spouses.

    As we mentioned above, the Veterans Advantage program offers guarantee fee-free loans and guarantee fee-reduced loans for veterans who receive funding through the various SBA programs.

    Service-Disabled Veteran-Owned Small Business Program

    This SBA program helps veteran small business owners who were injured while on duty secure a certain amount of government contracts.

    We wouldn’t call this program a loan or a veteran-specific grant, however, this initiative exclusively helps veteran business owners, giving special attention to those who were injured in service.

    Military Economic Injury Loans

    If you’re either a current or veteran military reservist whose small business was impacted when you were called into active duty, you could be eligible for a Military Reservist Economic Injury Disaster Loan (MREIDL).

    Like a Patriot Express loan, a MREIDL loan has very low interest rates—about 4%—with terms up to 30 years. This being said, however, you should be aware that if you need an MREIDL of more than $50,000, you’ll need to put up some collateral in order to qualify.

    Additionally, the MREIDL program will only fit certain military personnel. This business loan is available for veterans within one year of being released from active service. When giving out these loans, the SBA needs to determine that your business would be unable to recover without the government’s help. This means that you’ll have to prove that you’ve looked into other sources of business funding, and show that the alternative sources of credit out there aren’t available to you or would create a financial burden.

    Therefore, although this program won’t fit every veteran-owned small business, it’s absolutely worth considering if you think you might qualify.

Additional Resources for Veterans

At the end of the day, the SBA helps over 200,000 veterans run their small businesses each year—and they might be able to help you.

This being said, because the SBA takes such great strides to help veteran-owned small businesses, we suggest that you look to this government agency for development assistance first.

With this in mind, however, the SBA isn’t your only option.

Here are a few other resources you should look into when you need financing for your veteran-owned business.

    Institute for Veterans and Military Families

    This Syracuse University Institute hosts a variety of conferences and offers education and training programs for entrepreneurial veterans.

    If you’re interested in financing your veteran-owned small business, you should definitely take a look at this resource.

    StreetShares

    StreetShares is a veteran-run and owned business, so it’s no surprise that they’re passionate about helping veteran entrepreneurs.

    What is StreetShares?

    It’s an online auction marketplace that connects veteran entrepreneurs in need of financing with investors who are interested in funding small businesses.

    StreetShares offers all the benefits of alternative lending—like fast and easy approval processes—but puts a significant focus on veteran-owned small businesses.

    VetBiz

    The Veterans Business Resource Center, or VetBiz, offers resources like skills development, mentoring, and business consulting for veteran entrepreneurs.

    If you’re near one of their local branches, you’ll want to consider taking advantage of all their networking opportunities available for veteran business owners.

    UPS Franchise Discount

    Franchisees often need to find franchise financing to cover the many costs of opening up a franchise storefront—like an application fee and a franchise fee.

    With this in mind, veterans looking to start a UPS franchise should absolutely take advantage of this initiative: It gives veterans looking to start a UPS franchise a $10,000 discount on the franchise fee, and a 50% discount off the initial application fee.

    Moreover, many other companies, like Little Caesars and 7-Eleven, offer similar veteran initiatives for franchising.

    Hivers and Strivers

    Graduates from a U.S. military academy in need of financing for their small business should check out Hivers and Strivers, an angel investment group that provides funding for startups run by academy graduates.

    Therefore, if you graduated from West Point, Annapolis, the Air Force, or the Coast Guard, you might be able to find your best financing option here.

Frequently Asked Questions

The Bottom Line

At the end of the day, you may have been disappointed to learn that the Patriot Express loan program no longer exists. However, as we’ve discussed in this guide, you still have a number of opportunities from the SBA to fund and grow your veteran-owned small business.

Whether you think an SBA Express loan or an SBA microloan is the right fit for your business, there’s no doubt that any SBA loan will offer the most desirable terms, amounts, and interest rates on the market. This being said, however, applying for an SBA loan will require meeting several specific qualifications and going through a time-consuming application process. Nevertheless, if you organize your documents, work diligently with your lender, and choose the program that’s best for your business, you’ll very likely find that the funding you receive is worth the time and effort you put into the business loan application process.

Plus, even if you don’t apply for an SBA loan, the SBA (as well as a number of other organizations) can still provide a variety of veteran-specific resources to help put your business on the path to success.

 

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Vice President and Founding Editor at Fundera

Meredith Wood

Meredith Wood is the founding editor of the Fundera Ledger and a vice president at Fundera. She launched the Fundera Ledger in 2014 and has specialized in financial advice for small business owners for almost a decade. Meredith is frequently sought out for her expertise in small business lending. She is a monthly columnist for AllBusiness, and her advice has appeared in the SBA, SCORE, Yahoo, Amex OPEN Forum, Fox Business, American Banker, Small Business Trends, MyCorporation, Small Biz Daily, StartupNation, and more. Email: meredith@fundera.com.
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