Business loans for veterans

If you’re a current or former military member, you have options when it comes to funding a business. While the VA doesn’t provide loans directly, the Small Business Administration (SBA) Veterans Advantage Guaranteed Loans program offers waived or significantly reduced guaranty fees on some types of SBA (7) for military members and their spouses.

You may also be able to take advantage of small business grants and veteran entrepreneurship programs through the SBA — or get a line of credit, equipment loan or accounts receivable loan from a bank or online lender. Here’s a closer look at seven types of veteran loans and how to choose the right one for your needs.

7 business loans for veterans to consider

Loans for veterans, including SBA 7(a) loans, are available through banks, credit unions and online lenders. Here’s a rundown of each type.

SBA Veteran’s Advantage Guaranteed Loans

While not a specific loan type per se, the SBA Veterans Advantage Guaranteed Loans program offers waived or reduced guaranty fees on SBA 7(a) and SBA Express loans for military members — fees that can normally reach up to 3.75%. How much of a reduction you get depends on the type of loan and amount.

The program is open to:

• Honorably discharged veterans
• Active duty military
• Reservists
• National Guard members
• Spouses of any veteran or active duty service member
• Widows and widowers of spouses who died in service or as a result of a service-connected disability

To qualify for a SBA Veterans Advantage Guaranteed Loan, the business must be at least 51% owned by the person applying for the loan.

SBA 7(a) loans

The SBA 7(a) loan is the SBA’s most common loan and is partially guaranteed by the SBA with amounts up to $5 million. The SBA’s Veterans Advantage Guaranteed Loans program offers waived or reduced fees on its SBA 7(a) loans, as well as competitive rates and terms up to 30 years.

This how the reduced fee structure works for veterans:

• SBA loans of $150,000 or less: The upfront guaranty fee is zero.
• SBA loans between $150,001 and $500,000: The upfront guaranty fee is 50% less than what would be for non-veterans.
• SBA loans between $500,000 and $5,000,000: The upfront guaranty fee depends on the loan amount.

While the SBA 7(a) is one of the best options for veterans looking to fund or buy a business, you’ll need strong credit and solid business financials to qualify.

SBA Express loans

Like SBA 7(a) loans, SBA Express loans are partially guaranteed by the SBA and enable veterans to borrow up to $500,000 with no upfront guaranty fee. The difference between SBA 7(a) and SBA Express loans is that Express loans have a faster turnaround time — with responses on applications taking as little as 36 hours. Like the SBA 7(a) loan, you’ll need to show strong credit and business revenue with at least two years in business to qualify.

Online loan

Not everyone qualifies for the SBA 7(a) or Express loan. This is especially true if you’re just starting out or have a credit score below 650. However, online lenders offer a wide range of loan products besides term loans — including lines of credit, equipment loans and invoice factoring — that have more flexible underwriting criteria than SBA loans.

Online lenders also have quicker funding than SBA loan turnaround times — sometimes in as little as 24 hours — depending on the loan type. But because they’re not specifically for veterans and cater to higher-risk borrowers, online loans may come with higher APRs than SBA loans, plus origination fees ranging from 1% to 10%. But they can be a good option if you need quick turnaround funding to keep your business running smoothly.

Traditional bank loan

If you’re looking for a term loan to fund longer-term goals, business loans from banks tend to have the lowest rates — but they can be more difficult to qualify for. Traditional banks may want to see that you’ve been in business for several years and have strong revenue, along with a personal FICO credit score of at least 700. Some banks cater specifically to military members and may offer special discounts to veterans and their families.

Microloans

While not only for veterans, microloans offer smaller loan amounts of up to $50,000 and are designed to help small business owners get off the ground. The SBA offers microloans, but you generally need some type of collateral and a personal guarantee to qualify. The SBA works with designated lenders across the country. You can visit their website to find one in your state.

The Military Reservist Economic Injury Disaster Loan Program (MREIDL)

The Military Reservist Economic Injury Disaster Loan Program is a needs-based program offering loans up to $2 million to cover regular operating expenses that couldn’t be met because an essential employee was called to active duty as a military reservist.

How to qualify for a veteran business loan

While every lender is different, here are the general criteria for getting a business loan:

1. Credit scores. Traditional banks may require that you have a personal credit score of 700 or higher, while online banks may accept credit scores in the 500s, depending on the type of loan requested.
2. Annual revenue. Many lenders want you to have at least $100,000 in annual revenue — or around $10,000 per month — and may require a business to have an income greater than 1.25x of its normal operating expenses. Again, online lenders may be more lenient.
3. Time in business. Banks may require a minimum of two years in business, while online lenders may be more flexible, accepting applications from businesses that have been in business for a year or less.
4. Business plan. If you’re just starting out and want funding for a new business, you’ll likely be required to provide a solid business plan outlining how the loan will be used and paid back.
5. Collateral. While many business loans don’t require collateral, you may be able to get a better rate by securing the loan with collateral like real estate or equipment.
6. Personal guarantee. Some banks may ask for a personal guarantee from the business owner, especially if you’ve only been in business for a short time.

You’ll also need to provide documentation, like a government-issued ID, your military paperwork and bank statements. There are also no-doc lenders that allow electronic document submission, making for a faster application process.

Can I get a VA business loan?

While there’s no such thing as a specific VA business loan for veterans, the SBA Veterans Advantage Guaranteed Loan program waives or reduces guaranty fees on its SBA 7(a) and Express for eligible veterans. You may qualify for these loans if you have a strong personal credit score and business financials.

Startup business loans for veterans

Sometimes an SBA loan isn’t an option — especially if you’re just starting out. In that case, you can consider other types of loans and financing.

Veteran personal loans

With rates ranging from 7% to 36% APRs, personal loans from banks, credit unions and online lenders aren’t the cheapest option. But they may be easier to qualify for than a business loan and can generally be used for any purpose, including funding a business. While the best personal loans don’t charge origination fees, these fees can range from 1% to 10% of the amount borrowed, depending on your credit score.

Business credit cards

Business credit cards can be a convenient way to fund your business and may offer better rates, higher limits and more perks than personal credit cards. Business cards can also help simplify your bookkeeping by tracking tax-deductible expenses and building credit. Compare the best business credit cards.

How to get a business loan for veterans

1. Compare lenders. There are different SBA and other loan programs to cover a range of business financing needs. See our SBA loans guide to compare lenders and narrow down the best loan program for your needs.
2. Gather documentation. Before you submit an application, you’ll need to gather documents that show your military status, including Form DD 214, Certificate of Release or Discharge from Active Duty or a military ID. You’ll also need documentation for your business, like revenue and tax records and possibly a business plan or collateral.
3. Submit your application. Depending on the lender, you can either apply in person or submit your application online, uploading your documents. Online lenders may offer faster service and turnaround times than traditional banks.
4. Wait for approval and funding. After your loan is approved, carefully review your documents and sign them. The timeline for funding can vary widely. SBA loans can take several months to process and fund, while some loans from online lenders can be funded as soon as same-day.

Veteran resources

Here is a list of SBA programs for entrepreneurial veterans who want to start a business, plus organizations that offer grants to veterans.

Veteran Rehabilitation and Employment

If you’re a service member with a service-connected disability with the skills and desire to run a business, you may be eligible for this program. To qualify, you must be a veteran who didn’t receive a dishonorable discharge and were rated at 10% or more by the VA.

You’ll also need to provide a business plan and justification for wanting to start a business and demonstrate a reasonable level of experience in the industry you want to start a business in.

Women Veteran Entrepreneurship Training Program (WVETP)

This SBA program provides entrepreneurial training to women veterans, women service members and women spouses of service members and veterans to guide them through starting and developing a business.

Service-Disabled Veteran Entrepreneurship Training Program (SDVETP)

This SBA program provides entrepreneurial training programs to service-disabled veteran entrepreneurs who want to start a business or currently own a small business. However, funding is limited to a small number of applicants.

Veteran Federal Procurement Entrepreneurship Training Program (VFPETP)

This SBA program offers entrepreneurship training to veteran-owned and service-disabled veteran-owned businesses that want to pursue, or are already engaged pursuing, federal procurement.

Grants for veterans

There are a range of business grants available for veterans looking to start a business. These programs are available through the StreetShares Foundation, The Global Good Fund Veterans Leadership Program and the Hivers & Strivers Angel Fund.

See our personal loans for veterans page for more information on funding options for veteran-owned businesses.