Explore the Top Small Business Loans for Veterans
Nearly 7% of the U.S. population is either a veteran or currently serving in the military and more than 9% of businesses are veteran-owned. Together they employ 5 million people and have a 1.14 trillion dollar impact on the economy. Given the size of the veteran community and the scope of their commercial activities, it should come as no surprise that there’s a significant number of loans geared towards veterans.
Some of the best small business loans for veterans are administered through the U.S. government’s Small Business Administration (SBA). Loans through the SBA typically waive upfront fees for veterans and their spouses. SBA loans aren’t the only options for veteran-owned small businesses –– traditional banks and online lenders can sometimes offer terms that are even more attractive than those available from the SBA.
In this article, we’ll look at the options available to veteran-owned small businesses and some of the discounts available to those who’ve served. But first, we would like to thank the brave men and women for their service. Thank you.
Who Qualifies for the VA’s Military Business Loan?
Every lender uses slightly different qualifications and veterans can be turned down for reasons related to creditworthiness. The VA doesn’t require a specific credit score to qualify, but most veterans will find it difficult to get a loan with a score lower than 640. However, there are also certain eligibility requirements that must be met for the Veterans Administration to approve a military business loan.
The business must be at least 51% owned by veterans; this is an important consideration if you’re setting up a partnership with non-veterans. While most veterans qualify for these small business loans, there are a few caveats. The borrower can qualify if they are at least one of the following:
- Honorably discharged
- A current reservist or National Guard member
- Service-disabled
- A member of the military Transition Assistance Program
- The spouse of a veteran, reservist, National Guard, or member of the military Transition Assistance Program
- A widowed spouse of someone killed in action or who died as a result of injuries sustained during active duty
Applying for the Best Small Business Loans for Veterans in 2022
The Veterans Administration doesn’t administer loans directly, but rather through the Small Business Administration or non-profits. However, the Veterans Administration verifies the veteran status of borrowers, which can lead to substantial discounts.
To receive discounts, veterans and spouses of veterans should file a Form DD214, your military service record. Active duty members, reservists, and national guard members can file a DD Form 2, and transitioning members of the military can use DD Form 1173 to receive an ID card. Many of these forms will also require a photocopy of a military ID.
Once your veteran’s status is documented, there are several loan options to choose from. We’ll go over each of them, starting with the most convenient and easiest to get approval.
Online Loans Such as from LendThrive
Small business loans for veterans with bad credit are hard to come by and online lenders are usually your best bet. These loans usually come with higher interest rates than you’d find at a traditional bank or with loans backed by the SBA, but the approval process is much faster and there’s often more flexibility when it comes to paying them back.
With LendThrive, you can get a fixed rate business loan for up to $150,000 and approval comes in less than 48 hours. These fixed rate loans also come with interest rate reductions through the Rate Reduction Rewards program, where you pay less interest over time as a reward for making on-time payments.
SBA Express Loans
The SBA’s Patriot Express loan is one of the most popular loans for small businesses. Veterans can borrow up to $500,000 through the program and approval time is quite fast –– usually under 36 hours. The approval process is strict though, only accepting businesses that have operated for at least two years, have strong financials, and have a credit score above 650. Interest rates are close to 10% and there’s usually an upfront fee of 2-3%, which is waived for veteran borrowers. Additionally, loans of less than $25,000 may not require collateral.
SBA 7(a) Loans
These are some of the most attractive loans for small business owners as they can be used for just about anything –– payroll, rent, software, etc. That kind of flexibility is crucial when you’ve got a lot on your plate. Loans can be made for up to $5,000,000 with a relatively low fixed or variable interest rate. The downside to 7(a) loans is that the approval process can be slow.
Unlike with the Express loans, the SBA and their lending partner will need to carefully review your business’s financials. However, the SBA will guarantee up to 85% of the loan’s value, which gives the lender confidence that this is a low-risk investment for them. For loans of less than $125,000 the upfront fee for veteran-owned businesses is 0% increased to 0.25% on loans up to $5,000,000.
Traditional Bank Loans
Loans from traditional banks are usually the hardest to access, only approving funding for businesses that have been operating for several years, have very good credit scores, and have solid financial reports. Veteran-owned businesses don’t have a leg up in the application process, but many banks will provide them with lower interest rates. If you’re the owner of an established, profitable business, traditional banks have the lowest interest rates around.
As you can see, there are several viable options for small business loans for veterans to consider. If you want fast and flexible financing for your business, try LendThrive.
LendThrive Provides Small Business Loans for Veterans
At LendThrive, we are dedicated to helping veteran entrepreneurs and business owners succeed. Our fixed rate business loans offer veterans the funding they need to expand their business or keep operations running smoothly. The application process is quick and easy, and you will hear a decision within one business day.
If you need funding for your veteran-owned business, look no further than LendThrive. We want to see your business grow. Apply for a loan online today or contact us for more information.
