Veteran Business Loans 2019: Where to Find the Best

Learn everything you need to know to finance your veteran-owned small business.
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Where to Find Veteran Business Loans

Many veterans choose to start a small business after completing their period of service. Whether you want to launch a brand-new business, hire employees, open a new location, or simply could use some extra working capital, veteran business loans can help. Veteran business owners can access funding through government loan programs, alternative lenders, and even business grants.

In this guide, we’ll walk through all the different places a veteran business owner can find small business loans and access other types of business assistance.


The 5 Best Veteran Business Loans

In many cases, veterans who own a small business will apply to the same lenders as non-veterans. However, there are some programs that offer business loans specifically for veterans. If you’re a veteran entrepreneur looking to grow your business via debt financing, then any of these loan programs are good places to start.

1. Military Reservist Economic Injury Disaster Loans

The Military Reservist Economic Injury Disaster Loan (MREIDL) program is run by the U.S. Small Business Administration (SBA). Unlike other SBA loans, which are offered through banks and direct lenders, the SBA provides loans of up to $2 million directly to veterans through the MREIDL program.

Not intended for all veterans, this veteran SBA loan program is geared particularly toward small businesses that are unable to meet their operating expenses because the owner or an essential employee was called to active military duty. The loan helps small business owners cover their expenses until the employee can return.

If you own a small business that has struggled financially as a result of your active-duty military service or that of a key employee, consider applying for this program. You can qualify for a low-interest business loan (the current interest rate is 4%) that may be able to help your business get back on its feet.

The loan is available to businesses that apply between when the owner or employee is called to active duty and within one year of their release from active duty. The program allows for repayment terms up to 30 years. However, keep in mind that the program requires collateral for loans over $50,000.

2. SBA 7(a) Loans

The SBA 7(a) loan is the most popular type of SBA loan for small business owners. This loan, open to both veterans and non-veterans, offers up to $5 million to finance a variety of business needs. SBA 7(a) loans have long repayment terms—as long as 25 years for real estate—and low interest rates.

Through the Veterans Advantage program, the SBA waives the upfront guarantee fee for veterans for 7(a) loans of $125,000 or less. They offer a 50% reduction of the guarantee fee for 7(a) loans greater than $125,000 and going up to $350,000. The SBA also provides counseling and training to qualifying borrowers, which can aid the transition from military life to entrepreneurship.

Apply for an SBA 7(a) Loan

3. SBA Express Loans

Another SBA loan program that’s a good choice for veterans is the SBA Express Loan program. SBA Express Loans are a subprogram within the 7(a) loan program, offering loans up to $350,000 and fast approval decisions.

Both veterans and non-veterans can apply for SBA Express Loans, but the SBA has a Veterans Advantage program through which it waives the upfront guarantee fee for veterans who qualify for this loan. Normally, this fee is 2% to 3% of the loan amount. Veterans, reservists, national guard members, and spouses are eligible to have the fee waived.

One potential drawback for borrowers of the SBA Express Loan is that the maximum funding amount you can receive is $350,000. However, veterans can apply for and receive funding through this loan program.

4. Veterans Business Fund

The Veterans Business Fund (VBF) is an up-and-coming resource for veterans who are seeking funding to open or expand a small business or purchase a franchise business.

This 501(c)(3) nonprofit relies on donors to provide funding for veteran business loans at favorable terms. According to the site, this small business loan for veterans will be non-interest bearing to the extent permitted by law. The loan terms are for a period of five years or longer. 

Veterans won’t be able to finance their business entirely through VBF, as the program will offer loans only in conjunction with the business owner’s personal equity. Generally, the applicant must bring 50% of their own funds to the table, and VBF will extend the remaining half as a loan. Application cycles depend on VBF’s own fundraising efforts.

5. StreetShares

As a veteran-owned and operated business, the lender StreetShares has a passion for funding veteran business loans.

This online lender provides a variety of different types of small business loans and business lines of credit. Although you don’t need to be a veteran to qualify for a StreetShares loan, a significant portion of their lending dollars goes to veteran-owned businesses.

As an online lender, StreetShares has a strong focus on providing fast business loans. They have a quick, 10-minute application process, and there’s no need to provide a ton of documents to qualify. You should, however, make sure that you meet their minimum eligibility requirements before applying. You need at least one year in business, a 600 credit score, and $25,000 in business revenue to qualify for a StreetShares term loan or line of credit.


Important Requirements When Getting a Veterans SBA Loan

As you can see from the list above, there are many veteran small business loans offered specifically through the SBA. While SBA loans are a great option for veterans, you’ll have to meet certain qualifications to get one.

To be eligible for an SBA loan, you must first prove that you are a current or former member of the military, or a spouse of a current or former military member.

Below is a quick breakdown of the various paperwork and SBA loan requirements to prove your military status—depending upon the exact nature of your veteran status. This documentation should be included when you submit your SBA loan application.

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If You're a Veteran

You’ll need a copy of DD Form 214. This form is to be used for any military member other than those that are dishonorably discharged.

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Service-Disabled Veteran

You’ll also need a copy of DD Form 214. A service-disabled veteran can also provide documentation from the Department of Veterans Affairs (DVA) stating that you’ve been determined to have a service-connected disability.

 

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If You're a Transitioning Active Duty Military Member

You’ll need a DD Form 2 (Reserve), DD Form 2, “Armed Forces of the United States Geneva Conventions Identification Card (Active).” Other acceptable options are DD Form 2648 (Active Duty Military member) or DD Form 2648-1 (Reserve Component member).

 

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If You're a Reservist or National Guard Member

You’ll need DD Form 2, “Armed Forces of the United States Identification Card (Reserve).”

 

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If You're a Current Spouse of a Veteran

You’ll need evidence of your status as a current spouse and the veteran’s DD Form 214.

 

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If You're a Current Spouse of Transitioning Active Duty Military Member

You’ll need DD Form 1173, “Department of Defense Guard Reserve Family Member Identification Card,” and evidence that you’re a current spouse.

 

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If You're a Widow of Active Duty Service Member Who Died in Service

You’ll need paperwork and documentation from the Department of Defense (DOD) or DVA proving your status.

 

What to Do If Forms of Military ID Aren’t Available

If you’re a veteran but don’t have access to or can’t locate your DD Form 214, you can request a free copy online. You may also submit a Certification of Military Service or NA Form 13038 instead.

To qualify for a veteran business loan, you might also have to submit a photocopy of your military ID. If you don’t want to submit a copy of your military ID, you may submit a statement of service. A statement of service must be signed by or under the direction of the adjutant, personal office, or commander of the unit or higher headquarters you’re attached to.

Different military offices and branches use different forms, so there’s no one statement of service. These statements are typically on military letterhead but can be printed from a computer.

The statement of service must show:

  • The service member’s full name
  • The SSN or last four digits of SSN of the service member
  • The entry date of active duty or reserve guard duty
  • The duration of lost time for active duty
  • The name of the person providing this information

For reservists and guard members, the statement of service must show that the applicant is “active” and not in a control group or inactive.

A special note for service-disabled veterans: Make sure to make a note of your service-disabled status within your SBA loan application, as the SBA offers additional programs and benefits specifically for service-disabled veterans.

See If You Qualify for an SBA Loan

How to Get a Veteran Business Loan in 3 Steps

The steps for getting veteran business loans aren’t too different from getting business loans in general. Lenders emphasize the same factors, such as credit history, time in business, and business revenue. It’s all about waiting for the right time to apply and putting your best foot forward in your loan application.

Here’s how to apply for veteran business loans:

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Step 1: Figure out Why You Need a Veteran Small Business Loan

It’s easy to say, “Yeah, I need $50,000,” but many business lenders—and veteran business loan lenders—will want to know why you’re applying for that specific amount of capital, and what you’re going to use it for. Depending on how you’re intending to use the funds, you might qualify for one lender over another.

Are you consolidating past debt? Financing the expansion of two new stores? Or covering the cost of payroll for the busy season? Specificity in why you need a veteran business loan is key.

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Step 2: Get the Loan Documents in Order

Once you figure out why you need the funding and how much you can realistically afford, you’ll need to put time into organizing your loan documents.

While small business loan requirements will certainly vary from lender to lender, almost all business lenders will want to see the following: your business bank statements, the last couple years of personal and business tax returns, and key financial statements (such as a profit and loss statement). SBA loans have more documentation requirements and take longer to process.

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Step 3: Evaluate Your Loan Options and Apply

In almost every case, the best option for your business will be the least expensive option. However, business owners with struggling credit tend to only qualify for steep interest rates. If you’re in this scenario, you might not have too much choice but should still shop around at a few lenders.

Make sure you fully review your business loan agreement before accepting any loan offer. Scan the fine print for any fees that might come with your loan and the loan term that you’re agreeing to. You want to be fully confident before going into your loan that it’s affordable for your business (fees included) and the right repayment structure for you.


Veteran Business Grants

Whether offered privately or through the government, there are some small business grants that are specifically designed for veterans. Grants are highly competitive but have one advantage over loans. In contrast to loans, which must be paid back with interest, grants are like free money for your business.

Many grants are available to both veterans and non-veterans, but here are a couple of business grants that are open only to vets:

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1. USDA Veteran and Minority Farmer Grant

The 2501 Program, run by the U.S. Department of Agriculture (USDA), gives small business grants—as well as education, training, outreach, and other forms of support—to veterans and minorities looking to begin or expand their agricultural operations.

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2. StreetShares Foundation Veteran Small Business Award

This StreetShares grant program rewards veterans or military spouses who run businesses with up to $15,000 in grant money. To apply, you’ll need to send in a video pitch and a completed application form explaining why your business deserves the award. There is a first-, second-, and third-place winner.


Additional Resources for Veteran Small Business Owners

All entrepreneurs need a support system around them when operating and growing their businesses. Luckily, there are many business resources specifically available to veterans.

Here are the top veteran business resources available in 2019:

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1. Veterans Business Services

Veterans Business Services runs a private consulting service with vast experience in the particulars of veteran-owned small businesses.

From franchises to startups, finding investors to securing small business loans for veterans, the company has dealt with each of these challenges and can help connect you with the funding and resources you need.

Of course, it is fully possible to start a small business without a coach or consultant, but if you have been struggling to get started with your veteran-owned small business, a coach from Veterans Business Services may be able to help steer you in the right direction for both your business and a veteran business loan.

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2. Boots to Business

Run by the SBA and DOD, Boots to Business is a training program that teaches business fundamentals to veterans who are launching a business. It starts off with a two-day in-person program run by the SBA and trained business advisors, after which you can access online resources on an ongoing basis. 

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3. Syracuse University's Institute for Veterans and Military Families

The IVMF hosts conferences, offers online training, and runs a number of educational bootcamps for veterans transitioning to civilian life—some of which cover entrepreneurship, like the Entrepreneurship Bootcamp for Veterans

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4. NaVOBA

The National Veteran-Owned Business Association (NaVOBA) runs the Vetrepreneur Magazine, encourages governments and citizens to shop at veteran-owned businesses, offers marketing initiatives, and more.

It’s another networking opportunity for veteran small business owners, and though it might not provide small business loans for veterans, it does help with running a business in other ways.

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5. American Corporate Partners

Another option is the ACP, which connects military veterans to entrepreneur mentors and leaders in business in order to build business acumen, familiarize veterans with the skills and knowledge necessary for entrepreneurship, and provide an opportunity for networking.

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6. National Veteran Business Development Council

Veterans feel strongly about supporting other veterans. That’s the basic premise of the National Veteran Business Development Council, the only third-party nonprofit agency that offers certificates of eligibility for businesses owned by U.S. military veterans.

By getting your business certified through the NVBDC, you’ll gain access to sponsorships, marketing opportunities, entrepreneurship training, and more.

The agency can even help you connect to lucrative business opportunities through corporate and federal supplier diversity programs, which account for up to $80 billion in small business revenue dollars annually.

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7. Office of Veterans Business Development

Within the umbrella of the U.S. Small Business Administration, the Office of Veterans Business Development is charged with maximizing the availability of veteran business loans and business development resources for veterans. Along with connecting veterans with SBA-sponsored business loan opportunities, the OVBD serves as an advocate for all veteran entrepreneurs, working to create more opportunities and resources to help veterans transition to small business ownership.

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8. VetFran

For military veterans specifically interested in owning a franchise business, VetFran offers a wealth of franchise-specific resources.

Through the portal, you can connect to franchise financing opportunities specifically for veterans, use the International Franchise Administration’s VetFran directory to identify franchises with special veteran discounts, and gain access to educational tools and even scholarships for aspiring veteran franchise owners.

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9. Veterans Business Outreach Centers

Over 22 organizations around the country operate as Veterans Business Outreach Centers (VBOC). Through an SBA-funded program, VBOCs offer access to mentorship, a business development bootcamp, and veteran and career counseling. The center’s one-on-one business coaches are a great low- or no-cost alternative to expensive private consultants. It is a great place to start before searching for your veteran business loan.

 

 

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10. Veteran Women Igniting the Spirit of Entrepreneurship

Designed specifically for women veterans and female military spouses or partners, Veteran Women Igniting the Spirit of Entrepreneurship (V-Wise) helps veteran women entrepreneurs transition from a business idea or a skill set to a successful, thriving business endeavor.

Through educational events, online training, and ongoing mentorship, this program offers a great opportunity for veteran women and military spouses to network with and learn from other women in business who share their unique perspective.

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11. National Center for Veteran Institute for Procurement 

The Veteran Institute for Procurement helps veteran-owned and service-disabled veteran-owned businesses obtain federal contracts through education, registration assistance, mentorship, and other services.


Frequently Asked Questions

Does VA offer veteran business loans?

VA, or the Department of Veterans Affairs, does not provide loans or grants directly to business owners. However, they do run training and resource programs for veteran entrepreneurs. They also provide funding to nonprofit institutions that may operate their own lending programs.


How much does a veteran business loan cost?

The cost of a veteran business loan, like any business loan, will depend on a multitude of factors. The most important determinants of cost are the business owner’s creditworthiness, the age of the business, and the business’s financials.


Can I get a veteran business loan with bad credit?

Fortunately, there are business loans available for veterans with bad credit. These loans primarily come from online short-term lenders who extend loans to veterans and non-veterans. Be mindful that the lower your credit score, the higher your interest rate is likely to be. Try to improve your credit score before applying for veteran business loans.



Veteran Business Loans: The Bottom Line

Determination. Discipline. Self-confidence. Leadership. These qualities are a part of every veteran’s military training experience. And as it turns out, they’re also characteristics that make for strong, successful entrepreneurs.

As of the most recent census, there were 2.4 million veteran-owned businesses in the U.S., contributing over $1 trillion in sales to the country’s economic landscape.

With the resources listed above, veterans will be able to turn a business concept into a reality and secure the capital needed to grow a thriving business.

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