Patriot Express loans: What you need to know

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This SBA pilot program for veterans is no longer available. Here’s how to find an alternative.

The Small Business Administration (SBA) Patriot Express program was a popular choice for veterans and active-duty military business owners — when it was available. Unfortunately, the SBA discontinued the program in December 2013. But veteran-owned businesses aren’t totally out of options. There are several other SBA and non-SBA business loans out there that cater just to you.

What was the Patriot Express loan program?

Launched in 2007, the Patriot Express loan program offered government-backed financing to veteran-owned businesses. Veterans, active-duty servicemembers and their families could apply for up to $500,000 in business financing.

These loans worked like a combination of SBA 7(a) and Express loans. Qualified businesses could apply for term loans and lines of credit with the same rates as a 7(a) loan and an SBA guarantee of up to 75% or 85% of the loan amount. But the SBA would speed up the processing time to as quick as one day — compared to the five- to 10-day turnaround on its standard 7(a) loans.

SBA loans come with rates that are hard to beat and can be hard to qualify for. The Patriot Express program gave veteran-owned businesses the opportunity to up their chances of approval by competing with fewer applicants.

Why was the Patriot Express loan program canceled?

The SBA discontinued the Patriot Express loan program mainly because it had a higher default rate than other types of SBA loans. In September 2013, a report by the US Government Accountability Office (GAO) found that defaults on Patriot Express loans cost taxpayers over $31 million. The SBA also didn’t provide enough oversight to make sure that lenders were actually giving these loans to veterans, servicemembers and their families.

The Patriot Express loan program was a pilot, meaning it was set to either expire or get renewed. And in fact, the SBA renewed it once in 2010. But after the 2012 GAO report, the SBA couldn’t justify another extension even though it was popular.

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3 alternatives to the Patriot Express loan program

Just because the Patriot Express program is no longer around doesn’t mean there aren’t other financing opportunities for veteran-owned businesses. Begin your search for a competitive loan with these three alternatives.

    SBA Veterans Advantage Express loan program

    • Maximum amount: $350,000
    • Maximum terms: 5 to 10 years for working capital loans, 10 years for revolving lines of credit, 25 years for real estate loans
    • Maximum rate: Prime rate + 6.5%
    • Eligibility requirements: At least 51% owned and controlled by veterans, active-duty military in TAP, reservists, National Guard members, spouses of someone with eligible military service or widows of someone who died or became disabled during service, meet standard SBA requirements

    The Veterans Advantage Express loan program is the closest thing the SBA offers to the Patriot Express program. Now, it’s the only SBA loan specifically designed for veterans and their spouses.

    These Express loans tend to get approved a lot faster than your typical SBA loan. Usually it only takes the SBA around 36 hours to approve your application, though the entire process generally takes longer.

    You can’t borrow as much as you could with the Patriot Express program, though, with amounts capped at $350,000. The SBA currently waives all guarantee fees for Veteran Advantage Express loans. However, lenders must pay an annual service fee of 0.55%, which might get passed on to the borrower.

    Can I get a Veterans Advantage 7(a) loan?

    Not anymore. Before October 1, 2018, you could apply for a Veterans Advantage loan through the 7(a) program and qualify for no or reduced guarantee fees, as long as your loan was under $350,000. This was an attractive program for some business owners because 7(a) loans come with lower rates than Express loans.

    However, the SBA no longer offers reduced fees to veteran-owned businesses through the 7(a) program. If lower rates are more important to you than the waived guarantee fee that comes with an Express loan — and you don’t mind a longer turnaround — you might want to consider a standard 7(a) loan instead.

    Military Reservist Economic Injury Disaster loan program

    • Maximum amount: $2 million
    • Maximum term: 30 years
    • Rates: 4% on all loans
    • Eligibility requirements: Prove you don’t have the financial capacity to stay in business without SBA assistance, meet SBA credit standards and insurance requirements.

    This SBA loan program was specially designed to help businesses stay afloat after a key employee is called to active duty. Businesses have up to a year to apply for this loan after the employee is called up.

    It’s part of the SBA disaster loan program and is only meant to help your business survive the absence of that employee. You’ll want to look elsewhere if you need funds to grow or start a new business.

    StreetShares Patriot Express Line of Credit

    • Amounts: $5,000 to $250,000
    • Terms: to 3 years
    • Rates: Starting at 8%
    • Eligibility requirements: Be in business for 1+ year, $25,000+ annual revenue, have "reasonable" credit and be a US citizen.

    The StreetShares Patriot Express Line of Credit was created as an alternative to the Patriot Express loan. While most of its customers are veterans, you don’t necessarily need to have a military affiliation to qualify. It typically has a faster turnaround and simpler application than most SBA loans. But rates and terms might not be as favorable.

    Many other private business lenders offer special programs specifically for veterans and servicemembers. For example, Navy Federal Credit Union requires business members to have a connection to the military. You can check out our guide to veteran business loans to compare even more options.

    7 other resources for veteran business owners

    Business loans aren’t the only resources out there for business owners. If your business is owned by a veteran or member of the military, you might also want to take advantage of one of these programs.

    SBA 8(a) Business Development program

    The SBA 8(a) Business Development program is designed to give disadvantaged business owners a leg up in securing government contracts — including veterans. To qualify, business owners must be US citizens and have a net worth of $250,000 or less and under $4 million in assets. Your business must also be at least 51% owned and controlled by economically or socially disadvantaged individuals and meet the SBA’s size requirements.

    The government reserves a separate pool of government contracts for 8(a) participants and the SBA helps business owners navigate the application process. SBA 8(a) participants also get assistance with management training, marketing, accounting, operational planning and more, as well as access to a mentorship program.

    Office of Veterans Business Development

    The Office of Veterans Business Development (OVBD) might be a good first stop for finding resources specifically geared toward veteran business owners. It offers information on different types of financing, grants and assistance programs that could help. You can also attend workshops and trainings at one of the many OVBD outreach centers across the country.

    Service-Disabled Veteran-Owned Small Business program

    The federal government sets aside at least 3% of its contracts to Service-Disabled Veteran-Owned Small Business program participants, cutting out a lot of the competition. To qualify, your business must be at least 51% owned and controlled by veterans with a service-connected disability, meet the SBA’s size requirements and have at least one service-disabled veteran managing daily operations and making long-term decisions.

    Boots to Business program

    Boots to Business is an entrepreneurial training program for transitioning servicemembers and their spouses, including members of the National Guard and Reserve.

    Participants can take part in a two-day, in-person course to learn the ins and outs of starting a new business. You also have the option of signing up for online courses on topics like business fundamentals and market research. You can register through the transition office of your military installation.

    Women Veteran Entrepreneurship Training Program

    The SBA funds several entrepreneurship training programs exclusively for women veterans. These are run by private organizations and include the Veteran Women Igniting the Spirit of Entrepreneurship program, the Entrepreneurial Program for Innovation and Collaboration, the Bunker in a Box program and the San Antonio Lift Fund.

    They offer resources to train and mentor women veterans who want to start a business, as well as active-duty military and their partners.

    Service-Disabled Entrepreneurship Development Training Program

    The SBA also finances a few entrepreneurship training programs specifically for veterans with combat-related disabilities. These include the Entrepreneurship Bootcamp for Veterans with Disabilities, the Veterans Entrepreneurship Program, the Veteran Entrepreneurship Jumpstart Program and Dog Tag Bakery, Inc.

    All offer training in starting and managing a business with the aim of giving service-disabled veterans a cutting edge.

    Veteran Federal Procurement Entrepreneurship Training Program

    Offered through the Veteran Institute for Procurement (VIP), this is a free three-day training program for veterans interested in starting a business that involves federal procurement. The program covers over 20 topics including contracting, accounting and teaming agreements. You can apply through the VIP’s website.

    Bottom line

    While the Patriot Express loan program is no more, there are options out there for veteran business owners. In addition to SBA loans, the government also offers a variety of resources for veteran entrepreneurs and business owners seeking an edge in a competitive market.

    But you might not want to limit yourself to financing exclusively for veterans and military personnel — there’s a chance you’ll find a better deal elsewhere. Learn more about your options by reading our business loans guide.

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