Nearly 2.5 million U.S. businesses are owned by veterans. Veteran-owned businesses generate more than $1.2 trillion a year (source). If you’re a veteran, there are lenders and resources available to you that aren’t available to the general public. Still, securing financing to start or expand a business can be a challenge, for veterans and ordinary business people alike. This article provides a list of resources and lenders that specialize in offering business loans to veterans.
Startup loans for veterans
The Small Business Administration (SBA) formerly had two programs that provided startup capital to veterans, but both of those programs have expired. At the moment, your best bet is to apply for the SBA’s Microloan program, which provides up to $50,000 to start or expand an existing private business. Loans are for a maximum of six years, and interest rates start at 8%.
Other sources of startup cash could include:
– Your personal credit card(s)
If your credit score is at least 580, you can apply for a personal loan with Avant. Loans range from $1,000 to $35,000, with interest rates from 9.95% to 36%. Applications and funding can usually be completed within a day or two.
Meanwhile, a bill called the Veterans Entrepreneurial Transition Act of 2015 is making its way through Congress, which could open up more funding for veteran-owned startups. If the bill passes, you would be allowed to use your G.I. Bill money to start a small business.
Small business loans for veterans with bad credit
Even if you have bad credit, you may still be able to qualify for a small business loan if your company is well established.
- Kabbage: Kabbage doesn’t require a minimum credit score for business lenders. It does require you to have been in business for at least a year and had a revenue of $50,000 or more. They provide your business with a line of credit from $500 to $100,000, and interest rates start at 36%.
- OnDeck: OnDeck is an online lender that is the venture capital arm of Google. OnDeck requires that you have been in business for nine months and you must show revenue of $75,000 or more. Your personal credit score can be as low as 500, and loans start at $5,000. Interest rates range from 8% to 39%. Larger loans (more than $50,000) require that your company has been in business for three years or more.
- Funding Circle: Funding Circle is another possible source of funding. The company operates as a marketplace that specializes in small business loans. To be considered, your business needs to have been in operation for two years and be generating minimum annual revenue of $150,000. Loans range from $25,000 to $500,000 with interest rates starting at 8.99%. The company also has a 2.99%-4.5% loan origination fee.
Small business loans for veterans with good credit
If you have a good credit and are operating an established business, your options expand considerably.
Check out SmartBiz, an online SBA lender that helps small businesses shortcut the often lengthy SBA lending process. You’ll need to have been in business at least two years and an annual revenue of $50,000 or more to apply. Loans through SmartBiz range from $30,000 to $350,000, with payback terms as long as ten years. Interest rates range from 6.25% to 7.25%, with some referral and packaging fees. Borrowers must have a minimum FICO score of 600 to qualify.
If you’ve been in business for one year and your annual revenue is at least $25,000, StreetShares– a leading lending marketplace that connects investors with small businesses – is worth considering. In fact, they have a program specifically for veterans called the “Patriot Express Line of Credit.” Interest rates vary depending on your credit rating, time in business, and revenue. Loans range from $2,000 to $100,000, with APRs from 6% to 20% plus a 3.95% to 4.95% loan origination fee.
- LendingClub: LendingClub is another source of small business loans for veterans with good credit. You need a credit score of 600 or better to apply. Your business should be at least two years old with at least $75,000 in annual revenue. Loans range from $5,000 to $300,000, with interest rates starting at 8%.
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|Lender||Min. FICO||Minimum Revenue||APR Range|
|700||$10,000||4% – 8%||Apply|
|500||$100,000||5.99% – 98%||Apply|
|No minimum||$25,000||15% – 59%||Apply|
|No minimum||$50,000||20% – 99%||Apply|
Alternative business financing options
Another way to raise capital is through alternative financing methods, such as invoice financing.
Even if you have bad personal credit, companies like Fundera and BlueVine allow you, for a fee, to leverage unpaid invoices and receive cash in return.
Fundera connects you with compatible lenders and requires that you have been in business for at least two years and are generating at least $9,000 in monthly revenue.
BlueVine requires a personal credit score of 530 and will loan up to 85% of your outstanding invoices upfront.
Similarly, a merchant cash advance (MCA) can free up capital based on unpaid credit card invoices. Fundera also provides this type of financing, as does CAN Capital. CAN Capital has been in business for 17 years, providing MCAs as well as installment loans. MCAs can have high interest rates, however – as high as 70% APR.
Applying for small business loans for veterans
The application process will vary depending on your business and the type of loan you choose to pursue. For example, if you decide to apply for an SBA loan, the lender will ask you to provide documentation relating to your business and your personal finances. This might include:
– A detailed business plan with financial projections
– Tax returns
– Personal financial statements and bank statements
– Business documents
– Lease documents (if applicable)
– Your résumé
This program might even require that you complete a small business training program before you can qualify for a loan.
Other programs likely won’t have as many requirements, but you should be prepared to hand over as much documentation as a lender requests. A copy of your business plan and financial statements will be needed in almost every case.
The time that it takes to fund one of these loans also depends on the type of loan. With an SBA loan, it can take weeks or months before your loan is approved and funded. Other loans may be approved and funded within a few days. Factors that influence how fast a loan is approved include:
– The amount of money you’ve requested
– The lender
– How quickly you deliver the requested documentation
Valuable small business resources for veterans
The following resources either provide funding, support, or training for veteran-owned small businesses.
The Veterans’ Opportunity Fund (VOF) is a venture capital fund that was formed to invest in companies that are managed, owned, or started by U.S. veterans. To date its investments have focused on East Coast-based businesses and have ranged up to $3 million. You can submit a business plan through the company’s website.
Meanwhile, Military Economic Injury Loans are available through the SBA if you are an existing small business owner whose business has suffered because of your own (or a key employee’s) active duty service. The loan is available within one year of release from active duty, with repayment terms up to 30 years.
The Veteran Entrepreneur Portal (VEP) is a resource provided by the Department of Veterans Affairs in partnership with BusinessUSA to help veterans with small business ventures learn or purchase a franchise. The VEP connects veterans with various federal services, including financing opportunities.
Last but not least, the Service-Disabled Veteran-Owned Small Business Program is an initiative through the SBA that helps qualifying veteran business owners with a service-connected disability to obtain government contracts worth up to $5 million.
To learn more about lenders that are dedicated to serving military personnel and their families, consult our guide to the top 10 military loan lenders.