Veteran Small Business Loans - VA Loan Application

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Veteran Small Business Loans

Guide to veteran small business loans

When veterans of the armed forces transition back into civilian lives, many opt to become entrepreneurs. Increasing numbers of veterans are choosing to run their own small businesses rather than work for someone else. They bring to their endeavors the leadership, team support and solid work ethics they learned while in the military. In developing business savvy they usually turn to their banks for financial support. What they often encounter is a road block. Banks do not often offer funding, especially to veterans with bad credit.

veterans small business loans

We believe in giving back.

For those who have served our country it is sometimes difficult to start or return to their small business. Traditional lenders often require spotless credit and this is not always the case for any small business owner. Often earlier errors in judgment or the desire to put building the business before building one’s FICO come back to haunt when they seek additional working capital.

National Business Capital believes in giving back to our country's veterans by making funding their small businesses the easiest and fastest process possible, with the utmost respect and compassion. Veterans deserve only the best when seeking to grow and improve their businesses, and we aim to help.

How hard it is for a veteran to get a small business loan?

It’s not necessarily hard for a veteran to get a small business loan, but you’ll still need to meet a number of requirements. You’ll find a credit score of at least 685 is required for small business administration (SBA) loans and traditional financing options.

Startup business loans for veterans can be a bit more tricky to qualify for, but you'll find better approval rates at online lenders or alternative lenders. These lenders are often more lenient about requirements, making it easier to get financing.

There are three main options when it comes to getting veteran small business loans:

1. SBA loans for veterans

Also known as VA business loans, these loans are specifically designed for veterans and qualifying spouses. VA business loans come with lower fees, lower interest rates, and better terms than traditional loans made to non-veterans.

Despite being highly sought-after, these loans require at least 2 years of business history and a minimum credit score of 685.

2. Online lenders or FinTech platforms

Online lenders offer a wide range of financing products that are also highly accessible. You’ll find greater leniency on criteria like minimum time in business and credit score requirements.

For example, you can access veteran small business loans with only 6 months of business history. With favorable approval rates, online lenders may be your best bet when it comes to startup business loans for veterans.

3. Traditional banks

Traditional banks offer favorable interest rates and terms, and some may or may not even deliver additional benefits for veterans. While traditional bank loans are typically the first option to come to mind when entrepreneurs seek financing, they tend to be difficult to qualify for, as banks are notorious for low approval rates.

Does the VA give out small business loans?

No, the VA does not provide veteran small business loans. The name can be misleading, but VA small business loans aren’t actually issued by the Veterans Association (VA) - they are part of a program under the Small Business Administration (SBA). You’ll need to work with the SBA’s network of participating lenders if you’re looking to get a VA small business loan.

The SBA guarantees to repay a certain percentage of the loan to the lender in case of a default. In this way, lenders receive extra protection, which helps lower interest rates and increases funding amounts for veteran-owned small businesses.

The SBA has an entire branch dedicated to helping veteran-owned businesses when it comes to funding opportunities, networking, business development, and federal contracting opportunities.

Military spouses may also be able to access resources like financing, counseling, training, and contracting opportunities through the SBA’s Office of Veterans Business Development (OVBD).

What types of loans are available for veterans?

There are several different types of small business veteran loans. Take a look at the most common:

1. SBA Veterans Advantage Program

The SBA veterans advantage program grants reduced fees and lower down payments on SBA financing products to veterans and qualifying spouses.

It’s designed to make it easier for veterans and their families to get the financing they need to grow their businesses and support local communities. It’s also one of the most renowned programs for veteran small business loans.

At a minimum, your business must be at least 51% owned and controlled by one or more of the following type of person(s):

  • An honorably discharged veteran
  • A service-disabled veteran
  • An active-duty military member participating in the Transition Assistance Program
  • A reservist or member of the National Guard
  • Current spouse of a veteran, active duty service member, reservist, or national guard member
  • Widowed spouses of service members who died in active duty or from injuries resulting from their service

2. SBA Express Loan

SBA Express loans feature faster funding times than other government loans. Qualifying businesses can borrow up to $500,000 as a term loan or line of credit. Although these loans have lower funding amounts, you’ll receive a decision on whether you’re approved or not within 36 days.

SBA Express Loans are extremely popular with veterans. In fact, 73% of all SBA loans issued to veterans are $350,000 and below. Although this program isn’t exclusive to veterans, veterans can access special benefits if they qualify for funding.

The SBA is willing to waive guarantee fees entirely for businesses owned and controlled (at least 51%) by a veteran, active service member, or qualifying spouse.

Guarantee fees are charged by the SBA to borrowers to cover the administrative costs of processing the loan. Borrowers would typically have to pay up to 90 days after the loan’s approval and can use the proceeds from their SBA loan.

3. Military Reservist Economic Injury Disaster Loan

The Military Reservist Economic Injury Disaster Loan (MREIDL) program is designed for businesses with an essential employee who is called to active duty. This type of veteran small business loan helps cover working capital needs and other costs that arise in this scenario.

These loans have funding amounts of up to $2 million and low-interest rates. You may need to provide collateral to back up the loan if you are looking to borrow over $50,000.

While the MREIDL program can be a great resource for managing ongoing operating costs, proceeds can’t be used to cover lost profits or expand the business in any way.

What are the VA business loan requirements?

Requirements for veteran small business loans can vary depending on where you’re seeking funding. At a minimum, your business must be at least 51% owned and operated by a veteran, active duty service member, or qualifying spouse.

If you’re working with an online lender or fintech marketplace, such as National, you can qualify for a veteran small business loan with only:

  • 6 months of business history
  • 685 credit score
  • $10,000 in monthly gross sales

However, SBA programs maintain stricter VA business loan requirements. Your business will need to show the following:

2 years of business history

VA business loans, specifically those offered through an SBA program, require small businesses to have at least 2 years of history. In general, younger businesses are seen as significantly riskier than older, more established enterprises.

$100k in annual revenue

VA business loans, specifically those offered through an SBA program, require small businesses to have at least 2 years of history. In general, younger businesses are seen as significantly riskier than older, more established enterprises.

Credit score of 685 or higher

The SBA only works with businesses that are trustworthy and have a solid track record of making payments consistently and on time.  Keep in mind that the higher your credit score, the greater your approval odds and the more you’ll save on interest rates.

Other VA business loan requirements

Alongside the VA business loan requirements listed above, the SBA will also need to make sure:

  • Your business is for-profit, and not a pyramid scheme, gambling business, or lending business
  • Your firm meets the SBA’s size standards for small businesses
  • Your business is located and operates within the United States
  • You and other partners have reasonable invested equity
  • Neither you nor your partners are delinquent on any debt obligations to the U.S. government, including student loans
  • All owners with 20% or greater ownership meet the SBA’s character requirements - individuals with certain types of criminal histories are prohibited
  • Your business can demonstrate projected positive cash flow for two years
  • Your business has a demonstrable need for funding

If you’re unsure whether you qualify for a veteran small business loan, make sure to contact the professionals at National. We’ll work with you to assess your qualifications, provide insights on the best funding solutions available to you, and answer any questions you may have.

What are the benefits of being a veteran-owned business?

Being a veteran-owned business allows you to capitalize on tax advantages, grants, unique government-contracting opportunities, and a number of other resources. Aside from veteran small business loans, it’s also worthwhile to explore the following.

Veteran grants

Grants can be a great way to support and grow your business. The best part - you’ll never have to worry about having to pay back the funds. Some veteran small business grants include:

The StreetShares Foundation - This non-profit offers grants and funding opportunities for veterans and qualifying spouses looking to start or grow their businesses.

The Global Good Fund - Offers funding resources for veterans as well as business development and networking resources.

Hivers and Strivers - An angel investment group delivering startup funding to veteran-owned small businesses. The group typically invests between $250,000 and $1 million in a single funding round.

Veteran franchising opportunities

Veterans and their spouses can access special franchise opportunities through VetFran - an online search portal. By showing proof of your qualifying veteran status, you may be able to obtain a significant discount on buying a franchise.

Veteran federal contracting opportunities

The Office of Small and Disadvantaged Business Utilization helps veteran-owned businesses access set-aside federal contracting opportunities. The organization also offers resources for managing and financing your business.

Veteran business development resources

Veteran entrepreneurs can access a number of business development resources and networking opportunities. You can use the following tools to start and grow your business at any stage:

Boots to Business - Offered by the SBA, this program delivers entrepreneurial and business training courses as well as other resources.

The Office of Veterans Business Development (OVBD) - This SBA branch is entirely dedicated to promoting veteran-specific business development programs. You’ll find information on programs like the Service-Disabled Veteran Entrepreneurship Training Program (SDVETP), Women Veteran Entrepreneurship Training Program (WVETP), and more.

What is the maximum amount of a VA small business loan?

The maximum amount on a veteran small business loan is generally $5 million. However, the majority of veteran small business loans issued are for $350,000 or less.

Higher funding amounts can be difficult to obtain. They come with tighter requirements, and you’ll need to show a high credit score, strong revenue, enough time in business, and most likely collateral as well.

Different VA small business loan products can also have different funding amounts. For example, SBA express loans are only issued up to $500,000.

Where to find business loans for veterans with bad credit

The timeline for receiving funds from both traditional lenders and the SBA is quite lengthy. It usually takes several months from when the application is submitted to when funds are received. To stay solvent and to grow, small business must move at a much faster pace and therefore require a far shorter loan process.

So where can these entrepreneurs go to obtain financing for veterans with bad credit? Many turn to tried National Business Capital. We are a leading alternative funding source. We have assisted thousands of clients and located tens of millions of dollars to fund their enterprises.

Unlike banks whose loan decisions are based on tight guidelines, National Business Capital uses realistic underwriting criteria. We look at the big picture when reviewing our applications. This means that a low FICO or even an open tax lien are not immediate loan disqualifications.

How to apply for small business loans for veterans in 2022

Step 1: Choose a lender

You can find SBA-backed, veteran small business loans at traditional banks and online lenders, but you can also browse other types of veteran small business loans from different lenders.

Keep in mind that traditional banks tend to have the strictest requirements and lowest approval rates. You’ll find better approval odds at online lenders. If you’re unsure which lender to work with, consider using a business financing marketplace like National.

You’ll be able to browse personalized offers from many different lenders all at once. Simply review, and select the best interest rates and terms you qualify for!

Step 2: Collect your documents

Veteran small business loans come with many benefits and are highly sought after. It’s important that you prove your business is at least 51% owned and operated by a veteran, active service member, or qualifying spouse.

You’ll need to show honorable discharge papers, identification cards, or other types of military records. Spouses will need to provide evidence of current marriage to a veteran. Widows of veterans who died in active duty or from related injuries must provide documentation from the Department of Defense or the Department of Veterans Affairs. You can request military records through the VA.

On top of proving your qualifying status, you’ll also need to provide:

  • Business tax returns
  • Business licenses and registrations
  • Bank statements

Step 3: Apply!

Once you’ve gathered and submitted all your documents, your next step will be waiting for a decision. The length of the underwriting process can vary depending on the type of lender you work with - banks tend to take the most time. Online lenders can get you a decision in a few days - or even hours.

Start your application with National to review your offers for small business loans for veterans in 2022, as well as other funding solutions.

Apply now!

Apply for a Veterans' Business Loans Today

National Business Capital has many options to offer returning veterans and we want to contribute to making their business ventures successful. Contact our Business Financing Advisors at (877) 482-3008 to review your business, its monetary requirements and your future goals. Or, fill out this  1-minute application online to get started, and receive your funds in as little as 24 hours.

We’d like to establish an ongoing business relationship that offers financial solutions when you need them to further your enterprise - and, above all, we’d like to personally thank you for your Service!

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