This article covers the options on business loans for veterans. If you are looking for the best business loans online overall, check out this roundup based on our research.
Veterans own 10% of small businesses in the United States and employ more than five million people, according to a report by the U.S. Small Business Administration (SBA).
As someone who has served your country, you may have access to some programs that other business owners don’t. That being so, it’s important to know what options are available to fund your business and how to take advantage of them.
What’s more, it’s critical to avoid predatory lenders.
“There are many business finance providers out there, and not all of them have your best interest at heart,” says Sarina Siddhanti, U.S. head of commercial at Funding Circle. “Some use irresponsible or misleading practices and take advantage of small business owners’ need for cash.”
The best small business loans for veterans
While not all of these loans offer specific perks for people who have served their country, they do offer some of the best terms for both veterans and civilians alike. But make sure to shop around before you apply with one.
It’s easy to get overwhelmed when comparing business financing options, due to endless strings of acronyms and confusing terms”
“It’s important to do your research when considering a loan for your small business. Terms, interest rates, and fees fluctuate considerably between finance providers and can depend on a number of factors,” says Siddhanti.
“You might even want to give them a call to speak with a representative directly about your particular funding needs.”
All the business loan providers below offer to fund the businesses of veterans.
1) SBA Veteran Advantage loans
If you’re thinking about getting an SBA loan, the Veteran Advantage program can help you save money through fee reductions:
- No upfront fees on 7(a) loans of $125,000 or less.
- A $50 discount on 7(a) loans of $150,001 to $350,000.
- No fees on SBA Express loans of $150,001 to $350,000
To be eligible for the program, you must own at least 51% of your business and be honorably discharged or a service-disabled veteran, active reservist, or National Guard member.
It’s also available for active-duty service members eligible for the Transition Assistance Program, along with widows and spouses of service members.
Some top online lenders that offer SBA loans include:
Getting a business loan can be tough with all the requirements that lenders have. OnDeck is an online lender that has looser requirements than some of the other lenders we’ve seen, and you can typically get your funds within a few days.
You need at least fair credit to get approved for a loan from Funding Circle, but you can expect much better interest rates than you’d get with OnDeck. That said, the lender doesn’t offer smaller loans, which can make it a poor choice if you’re just starting out and don’t need a lot of money.
If you have less-than-stellar credit and you need capital yesterday, Kabbage might be worth considering. The lender’s funding time is lightning quick and it doesn’t have a high bar for approval.
That said, the repayment terms give you little time to repay the loan, and your interest rate could be sky-high.
If you’ve been in business for a while and have been successful, you may qualify for a loan with National Funding. The lender offers competitive interest rates, long repayment periods, and no collateral requirements.
That said, it might not be a good fit for brand-new or struggling businesses.
A possible alternative for business loans for veterans
The Veterans Entrepreneurship Transition Act of 2015 has been under review in Congress for a few years now but has yet to get past the Committee on Veterans’ Affairs. The bill would make it possible for the SBA to create a pilot program.
In this program, the SBA would offer veterans grants to start or acquire qualifying businesses. Since you typically don’t have to pay back a grant like you would a loan, it could make a big difference for people who have served their country to get help starting their own business.
If you’re interested in seeing this kind of benefit for veterans, contact your representatives in Congress and encourage them to get the ball rolling.
Which of the best small business loans for veterans is right for you?
Each of the small business lenders we’ve covered offer features that may or may not be good for your business. As you read through their pros and cons, compare them with other top business loan lenders to see how they stack up.
If you don’t understand exactly how much you’re really paying at the end of the day for financing, it’s a good sign you should walk away.”
Also, do some prep work before applying. “Check your personal credit score, which most lending companies will evaluate as part of the underwriting process,” says Siddhanti.
“Resolve any discrepancies and, if your score is in the 600s or lower, take steps to improve it before you approach a lender.”
Look at their interest rates, fees, funding time, loan amounts, repayment terms, and more. “It’s easy to get overwhelmed when comparing business financing options, due to endless strings of acronyms and confusing terms,” says Siddhanti.
“If you don’t understand exactly how much you’re really paying at the end of the day for financing, it’s a good sign you should walk away.”
As you do your research and consider all of your options, you’ll be in a better position to get the right loan to grow your business and achieve your goals.
Ben Luthi is a personal finance writer and a credit cards expert who loves helping consumers and business owners make better financial decisions. His work has been featured in Time, MarketWatch, Yahoo! Finance, U.S. News & World Report, CNBC, Success Magazine, USA Today, The Huffington Post and many more.