There are now more than 2.5 million veteran-owned businesses in the United States – the vast majority of which are small businesses and sole proprietorships. Even so, veteran-led businesses employ tens of thousands of people across the country.
Like many small businesses, veteran-owned companies often walk a fine line between success and failure. Occasionally, that line gets thinner due to issues related to financing.
Whether your cash flow is held up due to late payments from clients or you identify an important equipment upgrade that is just out of your financial reach, access to affordable funding can get you out of a variety of jams. For that reason, knowing where to find the best business loans is crucial for veteran business owners.
Not every loan option will be a perfect fit for your business and its needs. That being said, there are some standouts in the space. Here are the best business loan options for veterans:
The Small Business Administration (SBA) is a federal government agency well known for being an excellent resource for and champion of small businesses. One of the agency's primary functions is to guarantee loans to small business owners, encouraging banks to lend to small and new enterprises at rates typically reserved for more established companies.
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The SBA has a variety of small business loan programs, some of which are specifically geared toward (or made easier for) our nation's veterans. Three SBA programs, in particular, are excellent options for veteran business owners:
Veteran's Advantage for SBA 7(a) and SBA Express
The SBA 7(a) loan is the SBA's most popular loan program, guaranteeing millions of dollars in funding for the working capital needs of all business owners.
Veteran business owners, however, are eligible for the Veteran's Advantage program. This program waives the guarantee fee for any loans of $125,000 or less, or discounts it by 50% for any loans greater than $125,000.
The Veteran's Advantage also applies to SBA Express loans: The guarantee fee is completely waived, and veterans can borrow up to $350,000. SBA Express loans have slightly higher rates than SBA 7(a) loans, but the qualifications are less stringent and the underwriting and turnaround time is faster – measured in weeks, rather than months.
SBA 8(a) Service-Disabled Veteran-Owned Business Contracting Program
For veterans who both are business owners and were harmed in the line of duty, the SBA helps secure government contracts through the SDVOSBC program.
According to the SBA, its goal "is to award at least three percent of all federal contracting dollars to service-disabled veteran-owned small businesses each year."
This program helps veteran business owners avoid competing with thousands of other business owners in their industry for lucrative contracts, and also provides a mentor-protege program to aid veterans in navigating the process of competing for contracts.
Military Economic Injury Loans
For veteran business owners who were called in active duty and their small business suffered financially as a result, there's the Military Reservist Economic Injury Disaster Loan (MREIDL) program. The SBA sponsors the MREIDL program, offering low-interest loans (around 4%) with terms up to 30 years. [Interested in small business loans? Check out our reviews and best picks.]
Veterans Business Fund
The Veterans Business Fund is a 501(c)(3) nonprofit that is available as a funding resource to veterans who want to start or grow their business, or purchase a franchise.
The VBF can't fund your business initiative outright: You'll need to bring 50% of the equity capital required, as well as an outside lender, to the table. Additionally, the VBF will only approve applications for veterans who are unsuccessful in securing bank financing due to the lack of equity.
Assuming you qualify and once the VBF accepts applications, however, the terms are quite generous: VBF loans will be non-interest bearing "to the extent permitted by law," with repayment terms of five years or longer.
Hivers & Strivers
This angel investment group – with many investors who served in the military – supports startups run by graduates of U.S. military academies such as West Point. Its goal is to support young veteran entrepreneurs, whom they call "often the most overlooked and underfunded group of entrepreneurs in the nation."
Unlike the other options on the list, Hivers & Strivers does not provide debt financing, but investing. The investors from H&S may become board members, advisors and consultants to your business.
Another organization owned and run by veterans and for veterans, StreetShares is a lender geared toward supporting veteran business owners. StreetShares offers loans up to $100,000 (and lines of credit in very specific circumstances that depend on your location and industry) through a peer-to-peer lending network.
As short-term lenders go, StreetShares is an excellent option for veterans for a few reasons: It can offer funding within just a few hours in some cases; it has reasonable APRs that will never exceed 39%; and it provides a multitude of information and resources to help business owners succeed. That's the goal here, after all.
Business credit cards
Although there are no business credit cards specific to veteran business owners, we would be remiss if we didn’t go over this final, solid option for business funding. Business credit cards can function as a source of short-term, revolving credit. If you're a veteran business owner with an excellent personal credit history, you may even qualify for a 0% APR introductory offer from your card issuer. This is essentially an interest-free loan for the life of your offer – typically somewhere between nine and 15 months. No other short-term loan option can beat that.
Explore your business credit card possibilities – taking note of which issuers and cards offer the best perks and rewards as well.
Business owners from all backgrounds understand the importance of maintaining access to funding in times of plenty as well as in times of distress. In fact, one of the best times to apply for and use a business loan is when business is booming, rather than faltering.
Military veterans are some of the country's best organizers, planners, motivators and leaders. If you're a veteran, take the time to explore these business loan options as part of your due diligence when starting or building a business. You won't be sorry you did.