You served your country. Now let your country give back to you with a VA business loan.
Whether starting a business or expanding your existing one, you can find opportunities that support veterans and military personnel with the financial support and capital you deserve.
Read further to learn where to look for business funding and what to prepare to get the financing you need to succeed.
What types of business loans are available to veterans?
Veteran-owned businesses with a long track record of healthy finances can qualify for almost any type of business financing. But active duty stints often create gaps in your personal and business’s financial history, making it difficult for you to qualify for a loan.
Fortunately, many government agencies, nonprofit organizations, traditional institutions and online lenders offer financing customized for veteran businesses. These often come with discounted rates and fees, and can be less expensive than traditional business loans.
SBA Veteran Advantage loans
The Small Business Administration (SBA) backs loans especially for businesses with at least 51% ownership by veterans who have been honorably or medically discharged, or are active duty members of the Transition Assistance Program.
The most popular type of Veteran Advantage loan is the SBA Express loan. Businesses typically borrow less than $350,000. With this loan, you’ll get to take advantage of the already-low interest rates for these government-guaranteed loans with a reduced upfront guarantee fee.
SBA military economic injury loans
The Military Reservist Economic Injury Disaster Loan (MREIDL), also backed by the SBA, offers low-interest financing to businesses that have suffered because an owner was called into active duty. Rates hover around 4% and are designed to help these businesses get back on their feet.
These loans can be difficult to get. To qualify, you must have been released from active duty less than a year ago to and prove that your business would not be able to recover without external financing — on top of the SBA’s already-tough eligibility requirements.
Peer-to-peer loans for veterans
Some peer-to-peer marketplaces like StreetShares are designed to connect veteran business owners to investors who fund business financing. You can get a wider range of types of business financing through these platforms, including business term loans, lines of credit and invoice factoring.
Veteran franchising financing
Several corporations like UPS and 7-Eleven offer special financing options for veterans who want to open a franchise. With 7-Eleven, for example, you can get a significantly reduced franchising fee and unique financing options that are only available to veterans.
Nonprofit loans for veterans
Your business can also apply for highly-discounted financing with nonprofits like the Veteran Business Fund. These loans typically can’t cover all of your business’s financing needs, but they can come with interest as low as 0%. Nonprofits sometimes also offer help in getting additional financing from the SBA and other veteran-friendly lenders.
Want more options? The VA Office of Small and Disadvantaged Business Utilization is one of the most prominent federal resources available.
Who’s eligible for a VA business loan?
VA loans are typically limited to former military personnel from any branch of the Armed Forces. However, some loans allow military spouses and other relatives of veterans to apply for special funding.
You could also qualify for more funding options if you identify with a group that’s classified as a minority, so carefully research the full range of your options.
Part of the SBA 8(a) Business Development Program, the SDVOSBC sets aside at least 3% of government contracts for service-disabled veteran-owned businesses. While it’s not necessarily a type of financing, it levels the playing field by prioritizing these types of business owners who may be struggling. To qualify you and your business will have to meet a long list of eligibility requirements, and it could take a while for the contract to go through. Like with other government-backed programs, be prepared for the long haul.
Service-disabled veteran business financing
Part of the SBA 8(a) Business Development Program, the SDVOSBC sets aside at least 3% of government contracts for service-disabled veteran-owned businesses. While it’s not necessarily a type of financing, it levels the playing field by prioritizing these types of business owners who may be struggling.
To qualify you and your business will have to meet a long list of eligibility requirements, and it could take a while for the contract to go through. Like with other government-backed programs, be prepared for the long haul.
Want online financing? Compare top business lenders
What small business grants are available for veterans?
When loans aren’t enough, a grant could be a solid way to get financing for your business. Private, federal, state and local grants exist, but it’s a matter of finding one that fits you and your business needs.
Veteran-specific grants include the Little Caesars Veterans Program, UPS Franchise Discount, USDA Veteran and Minority Farmer Grant and StreetShares Commander’s Call Veteran Business Award.
How to apply for a VA business loan
You’ve done your research, compared your options and are now ready to apply. Before you start the application process, you can prepare by readying the basic documents you’ll need to increase your chances of approval, including a well-developed business plan.
You will need to show the lender that you’ve built a solid plan for success as well as demonstrate your financial need in getting there. You’ll also need to gather copies of your business revenue statements and possibly military records, depending on the loan. Some business lenders will check your personal credit, so it could be helpful to know your credit score before applying.
Another thing to keep in mind: Depending on the type of funding you’re applying for, you may need to prepare a presentation of your business plan to go along with your information.
Each lender will require slightly different information, but here’s a quick guide to the minimum documentation you’ll need when you apply:
- Your business tax returns.
- Financial statements for your business for the past two years.
- A balance sheet for your business for the past two years.
- Lease agreements.
- Proof of business ownership.
- Business asset transactions.
- State filings.
- Your personal financial information.
- A detailed long-term business plan.
- A prepared presentation that goes over your business plan and statement of need.