Many people who served in the U.S. military embark on new careers as small business owners. If you’re one of these veteran entrepreneurs, there’s good news: there are programs meant to help you start and grow your business. These programs offer different forms of assistance, including low-cost financing in the form of small business loans designed specifically for veterans.
What is a veteran business loan?
Typically referred to as VA loans, even when not administered by the Veterans Administration (VA), business loans for veterans are offered by a number of pro-veteran groups, as well as the Small Business Administration (SBA). VA loans help veteran business owners get the support they need to build, manage, and grow their businesses with confidence.
How can I use funds from a veteran business loan?
Some loans have restrictions on how you can use the funds. Luckily, business loans for veterans are usually pretty flexible. If approved, you can use a VA business loan in a variety of ways, including:
- Startup expenses – Cover the costs of establishing your business, including filing all the necessary incorporation paperwork, securing your storefront or office space, buying initial supplies, and more.
- Recurring expenses – Use a VA loan to pay monthly bills, like rent, utilities, software subscriptions, etc. You can also put your funds toward taxes.
- Hiring – Whether it’s seasonal or permanent, use your veteran loan funds to build or expand your team.
- Equipment and supplies – Stocking up on what you need is important when you’re first starting out. If you’ve been in business a while, it can also be a good idea to upgrade your equipment and technology to keep up with competitors.
- New space – Move your business into a larger space, or expand to an additional location with your VA loan.
- Remodeling – Make repairs or completely redesign your storefront or office to create a more enjoyable experience for employees and/or customers.
- Inventory – Retail businesses typically have a busy season. If yours is coming up, it could be a good idea to buy extra inventory to account for increased sales.
- Website updates – If you don’t handle your web presence internally, you’ll want to make sure you have a functional website set up. Once it’s up and running, you should update it every so often, especially if you need your site to accurately reflect your inventory.
- Marketing – Promote your business through the channels that are most likely to reach your intended audience. This could be mailers and local ads, or paid media and content marketing for online businesses. Consider investing in paid search and social media ads as well, so you can pinpoint your target customers.
Veteran business loan programs
Below, we walk through the options you might have for veteran small business loans.
SBA Veterans Advantage 7(a) Loan
The U.S. Small Business Administration’s Veteran Advantage program offers veterans and other eligible servicemen loans of up to $350,000, with substantial fee reductions on major SBA loan programs, such as the SBA 7(a) and Express Loans. To qualify for the fee reduction you must own at least 51% of the business. Veterans who qualify include:
- Honorably discharged veteran
- Service-disabled veteran
- Active-duty military service member eligible for the Transition Assistance Program (TAP)
- Active reservist and/or National Guard member
- Current spouse of any veteran, active duty service member, reservist, National Guard member
- Widowed spouse of a service member who died while in service or as a result of a service-connected disability
Military Reservist Economic Injury Disaster Loan (MREIDL)
If you are called into combat while running your small business, you may be able to apply for the Military Reservist Economic Injury Disaster Loan (MREIDL) from the SBA. This benefit features a 4% interest rate and a maximum loan terms of up to 30 years. MREIDLs are intended only to provide the amount of working capital needed by a small business to pay its necessary obligations as they mature until operations return to normal after the employee is released from active military duty. There are program limitations, as the MREDIL page explains: “The purpose of these loans is not to cover lost income or profits. MREIDL funds cannot be used to take the place of regular commercial debt, to refinance long-term debt or to expand the business.”
VA loans over $50,000 also require collateral.
SBA Express Loan
SBA Express loans enable borrowers to obtain up to $350,000 in capital. This can be structured as either a line of credit or a term loan. These are funds you can get fast. Approval periods are usually between 24 to 36 hours, which is quite a contrast to the long SBA loan approval process. Paperwork is not as intensive as well, and lenders make the decisions on which candidates qualify.
Types of VA business grants
The StreetShares Foundation was founded by veterans who sought to educate, support, and inspire American veteran business owners.
Each month, the StreetShares’ Veteran Small Business Award awards three veteran business owners up to $15,000 in business grants. Each winner receives educational resources and mentorship from business experts across the nation.
To apply you must download their featured ebook, write a 300 word summary, and submit a two-minute YouTube video about your business. To learn more about qualifying, click here.
The Global Good Fund and the Smithfield Foundation launched the Veterans Leadership Program to support “veteran entrepreneurs.” The eight-month program offers “personalized leadership development and executive mentoring” to military veterans looking to build careers as entrepreneurs. The program includes a $10,000 leadership development grant. To learn more about Veterans Leadership Program, click here.
Hivers and Strivers is an angel investment group comprised of US military veterans who invest in veteran-led start-ups. Their focus is on providing early-round funding for graduates of military academies and often serve in an advisory capacity to ensure business success.
What qualifies as a veteran owned small business?
There are many boxes to check when it comes to being certified as a veteran-owned or service-disabled veteran-owned business.
The two most important qualifications for the disabled veterans’ business program are:
- You must own at least 51 percent of the company applying for certification
- You must manage both day-to-day and long-term operations within the business
Full list of requirements can be found here.
National resources for veteran small business owners
The National Veteran-Owned Business Administration, or NaVOBA, aims to create corporate contracting opportunities for veteran business owners. The non-profit provides networking and training opportunities as well as a nationally recognized certification program that allows corporations to source the best veteran-owned businesses.
The SBA set up Veteran Business Outreach Centers that offer comprehensive education programs to veteran entrepreneurs. The program includes mentorship, counseling, and business training for veterans or military spouses. The Veteran Business Outreach Center is offered in nearly every state.
Over 20,000 veterans have participated with American Corporate Partners (ACP), a national nonprofit organization which seeks to help returning veterans transitioning to civilian life. ACP offers mentorship from leaders of Fortune 500 companies, networking, and online career advice to thousands of veterans across the country. Recently, the ACP has expanded its services beyond corporate mentorship programs by offering mentoring programs for women veterans and citizens interested in becoming mentors.
The Entrepreneurship Bootcamp for Veterans, or EBV, Foundation gives post 9/11 veterans with service-related disabilities extensive training in entrepreneurship and business management. Even after completing the program, graduates of EBV receive mentorship, promotion, and small grants to start their business. Since its inception the EBV Foundation has given $414,850 in business grants to 230 graduates. Click here to apply.
Another excellent program is the SBA’s Service-Disabled Veteran-Owned Small Businesses (SDVOSBC) Program. Each year, the federal government awards three percent of all federal contracting dollars to service-disabled veteran-owned small businesses. This allows your business eligible to compete for set-aside contracts. Set-aside contracts were designed to limit competition for small businesses to compete and win federal contracts. To learn more about set-aside contracts, click here. For more information about SDVOSBC, click here.
Regional resources for veteran small business owners
Nor-Cal FDC provides financial solutions to millions of small businesses in California, and has partnered with StreetShares to make access to capital fast and easy. Nor-Cal FDC offers Lines of Credit and Term Loans up to $150,000 with three to 36 month terms. Click here to apply and learn more.
Founded by a veteran who runs a successful brewery in New Jersey, the Arms 2 Artisans Foundation trains post-9/11 veterans to work in artisanal fields such as brewing, hard cider, coffee, and woodworking. Selected applicants will work 30 hours per week learning brewing and career skills and will earn a weekly stipend of a few hundred dollars. Learn more here.
The IVMF has trained and educated thousands of veterans and their families in education, career, and life skills with their world-class programs since the 1920s. With over 70 professional staff members, the IVMF is a premier institute for veterans of all ages seeking additional work support and training. Click here to learn more.
This program is designed to help service-disabled veteran business owners overcome the growth challenges of running a small business. Certification benefits include invitations to TSB networking events, promotion of business, the ability to access non-competitive bid opportunities, and more. The TSB also offers loans to qualified small Iowan businesses looking to grow or start their business through the Iowa Center for Economic Success of up to $50,000. Learn more here.
PeopleFund is a nonprofit lender and certified Community Development Financial Institution that offers loans and educational training to small businesses, start-ups, and nonprofit organizations across the state of Texas. They offer business financing options up to $350,000 with terms up to 7 years, and Veteran business owners receive special interest rates. Click here to apply.
The Veteran Entrepreneur Program (VEP) is an amazing resource for any Texan veteran entrepreneur. VEP offers business education and skills training, personalized business assistance, and a Letter of Verification which can help save your business hundreds of dollars upon incorporating your business in the state of Texas. Find out more here.