Small Business Loans for Veterans

Q: What are the eligibility requirements for a veteran business loan?

In order to qualify for a veteran business loan , you must be a U.S. military veteran or the spouse of an active-duty service member. You also must have an acceptable credit score, sufficient monthly income and sufficient collateral if applicable.

Unfortunately, veterans typically don’t have an opportunity to build credit.

That’s why the SBA and other organizations offer grants and loans specific to those who have served our country.

Each year, veterans around the United States start their own businesses after returning to civilian life following military service. If you are a veteran entrepreneur, there are many government resources to help you transition to business ownership and funding programs to help you find a loan or grant specifically designed for your specific situation and business.

While often called “veteran small business loans,” these programs and loans are generally available for:

Military veterans (honorably discharged or service-disabled)
Active-duty military service member
Active reservist
Members of the National Guard
Current spouse of any veteran, active duty service member, National Guard member or reservist

Here’s what you need to know about the programs and funding available for veteran entrepreneurs.

Types of Small Business Loans for Veterans

Veteran business owners can apply for all the same small business loans as other business owners, but there are also unique advantages to certain types of loans for veterans. These are some of the best business financing options available for veterans.

SBA Express Loan Program

While SBA loans are available to all business owners, there are some unique advantages for veterans who own small businesses. For the SBA Express Loan, veterans can apply without having to pay an upfront guarantee fee, which allows veterans to access funding at low-interest rates with fewer obstacles. The SBA Express program helps business owners get funding more quickly by expediting the loan review process, which can traditionally be quite long.

The SBA does not directly lend to small business borrowers, but rather guarantees a large percentage of business loans to approved businesses. There are several different types of SBA loans, including SBA 7 (a) loans, CDC/504 loans, and microloans.

Military Reservist Economic Injury Disaster Loan Program (MREIDL)

If you are a military reservist, the SBA also offers Military Reservists Economic Injury Disaster Loans (MREIDL). These low-interest loans are available to businesses that need extra money to stay open because an essential employee has been called to active duty. MREIDLs are available in amounts up to $2 million and collateral is required for loans that are over $50,000.

As a small business owner, you can use this loan to pay someone to oversee your business while you are on active duty. If you employ reservists, this gives you a buffer if one of your employees is called to active duty.

Equity Financing

With equity financing, you offer investors partial ownership in exchange for funding. Rather than owing the money back plus interest, you share a portion of your company’s profits with the investor(s). Many individual investors and angel investors are particularly interested in helping out veteran-owned businesses. And while you are giving up some control, these investors are likely more interested in things like your business plan than your credit score.

Online Small Business Loans for Veterans

Many types of alternative lending are more accessible to businesses that have a difficult time getting traditional business loans. Merchant cash advances, working capital loans, invoice financing, and invoice factoring are all types of short-term financing that can help improve your cash flow or grow your business without the strict requirements that come with regular business loans.

In addition, equipment financing is an option for business owners to get the equipment they need without having to pay a large upfront expense. Microloans may be another option, as organizations that offer microloans may have a vested interest in helping veterans.

Business Line of Credit or Credit Card for Veterans

Unlike a term loan, a business line of credit or business credit card can be a great financing option if you want flexible financing. With a line of credit, you only have to pay back the amount that you actually use (plus interest) and the same rules apply for business credit cards. If you know you will need business financing, but you aren’t sure exactly how much capital you need or don’t want to commit to a set loan amount.

Business Grants for Veterans

In addition to small business loans for veterans, there are national and local grants that are available for veterans and active duty service members. Here is a small selection of the most popular grants for veterans.

The VetFran Business Grant Fund

If you want to open a franchise, the VetFran Program is an essential resource. This organization helps veterans get started as franchisees and works directly to educate franchisors about the talent that veterans bring to the tables as franchisees. This organization also provides grants up to $10,000 for veterans who have been awarded franchises through the IFA VetFran program.

Hivers and Strivers

Hivers and Strivers is an angel investment group for businesses owned by graduates of any and all U.S. military academies. Because many investors in the Hivers and Strivers group are veterans themselves, they are likely to truly understand the value of your military experience in starting and running a new business. Having an investor who is invested in you and your business rather than simply a return on their investment can help you to excel and grow your business.

StreetShares Small Business Award

The StreetShares Foundation is a nonprofit that provides coaching, resourcing and more to encourage military entrepreneurship. The foundation key program is the StreetShares Small Business Award, which is a grant program for veteran entrepreneurs. This grant can help to make starting a business financially feasible for veterans and their families.

Government Programs and Organizations that Serve Veteran-Owned Business

Many departments of the U.S. government and outside organizations have a vested interest in helping veteran entrepreneurs succeed. Some of these organizations offer grants or loans to veterans while others provide tools to help veterans find financing. Some of these programs include:

Veteran Entrepreneur Portal

The Department of Veterans Affairs (VA) provides a portal full of resources and information designed for veterans looking to start, grow or fund a business. In addition to business resources, this portal includes valuable information about doing business with federal agencies (or government contract work) and the VA, as well as training programs available to veterans through the VA.

Boots to Business

The Boots to Business program is a U.S. Small Business Administration initiative through the Department of Defense Transition Assistance Program (TAP) that provides courses and information to help veterans transition from active duty to civilian life. If you are thinking of starting a business, this program can provide the training you need to be a successful entrepreneur. If you are an Active Duty Service Member, veteran of any era or a military spouse, you are eligible for this program.

SBA Resources for Veteran-Owned Businesses

The SBA has many different resources for veterans, as well as specific resources for women veterans and service-disabled veteran entrepreneurs. The SBA provides training programs and online information that can help business owners get started or keep their businesses going through the Office of Veterans Business Development.

The SBA also has Veteran Business Outreach Centers (VBOCs) in many locations around the United States. You can visit these local centers for business advising and to learn about any local grants or funding programs for veterans. You can find the nearest VBOC to you from the SBA.

FAQs About Veteran Business Loans

What is a veteran business loan?

A veteran business loan is a financial product specifically designed to help veterans and their spouses own and operate their own businesses.

What are the eligibility requirements for a veteran business loan?

In order to qualify for a veteran business loan, you must be a U.S. military veteran or the spouse of an active-duty service member. You also must have an acceptable credit score, sufficient monthly income and sufficient collateral if applicable.

Are there special benefits available to veterans who obtain veteran business loans?

Yes, veterans are eligible for many different types of special benefits, such as lower interest rates or longer repayment terms than those typically offered on traditional small business loans. In addition, certain lenders may provide additional incentives or discounts based on your military service record.

Which types of businesses are eligible for veteran business loans?

Veteran business loans can be used to finance virtually any type of legitimate small business venture, either as start-up capital or to expand existing operations. Examples include retail stores, restaurants and consulting services.

How do I apply for a veteran business loan?

Applying for a veteran small business loan requires filling out an application with information about your military service record and other personal information such as your address and Social Security number. In some cases you will also need to provide financial documents like income statements or tax returns as well as documentation demonstrating that your proposed use of the loan proceeds is permissible under applicable laws and regulations.

Certain products may not be available in all states.

Certain business loan products are made available through Retail Capital LLC, a licensed California Finance Lender.