How to Get a Veteran Business Loan

how to get a veteran business loan

Military veterans like you possess traits that are naturally well-suited for the business world. These traits include leadership, commitment, teamwork, and the ability to thrive under pressure. So, it comes as no surprise that veteran-owned businesses have high success rates, even when their founders have little or no business experience. Part of maintaining business success is having access to capital at any given time to boost cash flow, cover the cost of business expenses, consolidate debt, and pursue growth opportunities. That is where business loans for veterans come into play.

If you are one of the 2.6 million veteran business owners in the United States, you most likely applied for a business loan at one time or another. If you hit a roadblock when trying to obtain funding, you are not alone. Veteran entrepreneurs typically have less access to capital than non-veteran entrepreneurs. Reason being, military personnel are busy serving our country and, as a result, they cannot not build solid credit profiles. If you are looking for information about the various loan options that are available, this Balboa Capital blog article is for you. It explains how to get a veteran business loan.

Gather up your company’s paperwork.

No matter what type of lender you choose, certain financial documents and business documents will be required when you submit your loan application. Generally speaking, banks will need more information than non-bank lenders, but it is a good idea to gather up as much information as possible so you are fully prepared. Having copies of everything in an organized manner can help accelerate the application process and save you the hassle of having to gather up additional documentation and paperwork. The main things you will need include financial statements and accounting records for the past two years, and basic information such as your business name, Federal Tax ID number, legal structure, and business insurance policy.

Review your veteran business loan options.

Many veteran business owners assume that VA business loans are provided by the Department of Veteran Affairs, but this is not the case. The SBA works with designated lenders nationwide that extend business loans to veterans. There are several different loan options available for veterans. Each type of loan has its own pros and cons. So, before you choose one, you should become familiar with each option so you make the best decision. Following are the most popular types of business loans for veterans.

SBA loans for veterans.

Participating SBA lenders extend business loans for veterans under the SBA Express program, and the SBA 7(a) program. The SBA does not issue loans; it guarantees them. For example, the SBA guarantees 85% of a loan of up to $150,000, and 75% of a loan that exceeds $150,000. The SBA also offers working capital loans of up to $500,000, and microloans of up to $50,000.

If you need a loan to cover the costs of fixed assets or soft costs, take a look at the SBA 504 loan program. This loan is available in amounts up to $5 million and the repayment periods range from 10 to 20 years. To apply for an SBA loan, conduct a search online for an SBA lender in your city or town.

Lastly, the Small Business Administration (SBA) has long-supported veteran business owners by providing them access to small business workshops and training, as well as business development opportunities via government contracts.

Unsecured business loans for veterans.

Unsecured business loans for veterans do not require collateral, which reduces the risk for the borrower. That said, an unsecured loan will almost always have a higher interest rate than a secured loan. Unsecured loans are a popular choice among veteran business owners because they can be obtained quickly, even with a less-than-stellar credit rating.

Unsecured business loans for veterans are available from most on-bank lenders and the loan amounts range between $3,000 and $250,000. Payback terms for unsecured loans are much shorter than those for traditional loans. You can expect to see repayment periods between 3 and 24 months.

Business cash advance for veterans.

A business cash advance, also known as a merchant cash advance, is not an actual loan. It is a solution that helps address the short-term cash flow needs of businesses that have a high amount of monthly transactions. The advance is provided as a lump sum of cash that is paid back with an agreed-upon percentage of future credit card and debit card sales. Cash advances normally range from $5,000 to $250,000.

If you are veteran business owner that runs a coffee house, restaurant, retail shop or specialty store, a business cash advance for veterans might come in handy. These types of businesses usually have a constant flow of customers who pay with credit cards and debit cards.

Working capital loans for veterans.

Working capital loans for veterans are perfect for filling cash-flow gaps and financing your company’s daily operations. Unlike a traditional bank loan with a lengthy payback term, working capital loans have shorter repayment periods. You can get a working capital loan for veterans and use it to stock up on inventory, pay your employees, increase your advertising budget, and just about any other operational need. Most lenders offer working capital loans of up to $250,000 for veterans.

Business line of credit for veterans.

A business line of credit is a predetermined amount of growth capital that you can access and repay, with interest, whenever your veteran-owned business needs it. The great thing about a business line of credit for veterans is that you will only be required to repay when you draw from your credit line. As an example, let us say you have a $200,000 credit line and draw $20,000. In this case, you will pay back the $20,000, plus interest, and nothing more. The balance of $180,000 stays put and is interest-free.

Summary.

Making the decision to get a loan for your veteran-owned business is an important decision. That is why you should not rush the process and go with the first lender you find. Sit back, research the various options that are available, and make sure you get the business loan interest rates and repayment terms that work with your budget.