Best Alternative Business Loans for Veterans Feature Comparison
||Min. Credit Score
||Min. TIme in Business
||$25K - $6M
||$5K - $150K
||4.66 - 8.99%
||4.75% - 7%
||0.25 - 25%
||No minimum required
U.S. Small Business Administration Loans for Veterans
Here are various loan types available for veteran entrepreneurs:
SBA Standard 7(a) Loan Program
The SBA 7(a) Loan Program is the most common loan program offered by the Small Business Administration. The main benefits of this loan are the low-interest rate and the excellent repayment terms.
The SBA 7(a) loan has a government guarantee. In most cases, the SBA guarantees up to 85% of the loan. A business can use the SBA 7(a) loan funds for any use it has, including short and long-term working capital, refinancing current business debt, purchasing equipment and supplies, and more.
The SBA 7(a) loan amounts range from $30,000 to $5,000,000 with repayment terms from 10 to 25 years. The interest rates are very low. Any veteran-owned business can apply for an SBA 7(a) small business loan through online facilitators like SmartBiz or SBA’s website.
Military Reservist Economic Injury Disaster Loan (MREIDL)
The MREIDL loan program provides financial help to small businesses operated or employ military reservists as essential employees. The MREIDL program provides working capital until operations return to normal and the essential employee is released from active military duty and is back at work.
The MREIDL fund does not cover lost income and cannot be used to refinance long-term debt or to expand a business. You can obtain up to $2,000,000 via this program.
The smaller loan amounts provided by the SBA are called SBA microloans. Microloans are designed to help veteran and women-owned businesses, minority-owned businesses, etc.
The max loan amount is $50,000, the average microloan is $14,400, and the funds are provided by intermediary lenders like non-profit, community-based organizations. The appeal with SBA-backed microloans is the low 6.5% interest rate and the six years repayment period.
SBA 504 Loan Program
The 504 loan program is backed by the SBA, involving term loans used for the expansion and modernization of objects and commercial real estate. The SBA 504 loan is up to $5,000,000, and you can use it to promote business growth and job creation. A 504 loan cannot be used for working capital, existing debt repayment, or rental real estate investment.
Veteran-owned businesses looking to purchase a building or land, building new facilities for their business, and investing in long-term machinery and equipment could apply for an SBA 504 loan.
SBA Express Loan
From 2007 to 2013, there was a special Patriot Express Loan program, where veteran entrepreneurs were the primary eligible borrowers, which is now known as the Express Loan program. The Express Loan goes up to $500,000.
It is among the most popular loan delivery methods, as the main attraction with the Express Loan is that it is granted (or denied) within 36 hours of application.
The Express Loan can be used for working capital, purchasing real estate, and refinancing debt. The SBA Express Line of credit has an average repayment of seven years, ranging from 10 to 25 years.
SBA Veterans Advantage Loan
To help veteran-owned businesses, the SBA offers Veteran Advantage Loans. To be eligible, an honorably discharged veteran must own the business's majority (at least 51%).
Service-disabled veterans could also run the business, active-duty military service members participating in the Transition Assistance Program (TAP), reservists, National Guard members, and spouses. Widowed spouses of service members who died while in service are eligible to apply.
The Veterans Advantage loan ranges up to $350,000, and the SBA does not require any upfront fee for loans under $150,000. Veteran business owners have an excellent chance of getting a Veteran Advantage loan, as the SBA also enables veteran-owned businesses better opportunities via government contracts.
Veteran Loans from Credit Unions and Nonprofit Organizations
In addition to the lenders above, many credit unions and nonprofit organizations also offer loans for veterans. You may want to consider these loan options.
PeopleFund is a nonprofit lender and certified Community Development Financial Institution that works to foster diversity and innovation. PeopleFund has lent money to over 3,000 small businesses and nonprofits in its 25-year history.
PeopleFund focuses on supporting veterans, women, and minorities in low- to moderate-income areas of Texas. Loans are customized to each applicant’s needs, and PeopleFund provides one-on-one consulting and group training to help business owners succeed. Fourteen percent of the businesses funded are veteran-owned businesses.
Loan options include working capital term loans, revolving line of credit, and financing for equipment purchases. Loan interest rates range from 7 to 15%, and PeopleFund offers veterans discounted interest rates. Existing small businesses are eligible for up to $5 million in funding, and loan terms range up to 84 months.
The Navy Federal Credit Union is a not-for-profit credit union that was founded in 1933. Today, the credit union has more than 11 million members and serves the military, veterans, and their families. Loan options for veterans include business lines of credit, vehicle and term loans, and real estate loans.
Business lines of credit amounts start at $35,000 and are ideal for business growth, unexpected expenses, and navigating cash flow gaps. Borrowers only pay interest on the funds that they use. Applicants will need to provide personal and business tax returns for two years, a business plan, financial statements, a personal financial statement, and proof of collateral.
Term loans are available for purchases and refinancing, including vehicle and equipment purchases. These loans carry a $150 origination fee, but there is no prepayment penalty. Applications are processed within seven to 10 days. Among other requirements, applicants will need to provide a certificate of insurance, a personal guarantee, and a personal credit check will be performed.
Hivers & Strivers
Hivers & Strivers is an angel investment group that invests only in companies that are led by military veterans. Those companies include Vet Accel, True Made Foods, Independence Hydrogen, and LeaseLock.
Hivers & Strivers provides early-stage capital for businesses, and veterans need to apply through Gust. Initial investment amounts range from $200,000 to $500,000, and businesses need to be beyond the concept stage. Applicant businesses should provide opportunity for significant growth and should not be reliant on government contracts.
Accion is a global nonprofit that was founded in 1961. Accion works to empower people who are underserved, including veterans, and the Accion Opportunity Fund helps more small businesses access the loans that they need.
The Accion Opportunity Fund supports business owners in multiple ways, including giving them access to capital, networks, and coaching opportunities. Over its 25 years of service, the fund has invested $516 in small business owners.
Loan amounts range from $5,000 to $100,000 with terms of 12, 24, 36, or 60 months. There are no prepayment penalties, and interest rates start at 5.99%. The loan application is available online, and applicants can also get phone support in Spanish and English. Eligible applicants will be given multiple prequalified offers, so they’ll be able to choose the loan option that’s best for them.
What is a VA Small-Business Loan?
VA small business loans are financing options designed to support veteran-owned businesses. While the U.S. Department of Veterans Affairs doesn’t provide VA small business loans, these loans are available from multiple sources, including traditional banks and online lenders. They may feature lower interest rates or eligibility requirements designed to make them accessible for veterans.
Who Qualifies for a VA Small-Business Loan?
Loans designed specifically for veterans will typically require that the applicant be an active military member, a veteran, or a family member. Often a spouse or widowed spouse of an active military member or veteran can also apply. The applicant may need a minimum credit rating, often in the 600s, and may need to provide business plans, financial statements, tax information, and business licenses or certifications to qualify for a loan.
Many loans have specific business requirements as well. It’s common to require that the business be located and operating in the United States. Some loans also have specific requirements for the amount of time that the business has been in operation, and may require that the business be at least a year old. Businesses may also need to meet income requirements, often starting at $120,000 in revenue per year. The business may need to be entirely veteran-owned or the majority of the business may need to be veteran-owned.
How Do You Apply for a VA Loan?
In addition to the typical types of documentation, like business plans, financial statements, and tax information, veterans and their families also need to produce forms that prove their service histories.
There are multiple documents that prove service history and military status, and loans may accept all or some of the following:
Military ID card
Veterans ID card
VA-issued ID card for health care
Veterans designation on a driver’s license
State veterans ID card
Veterans group membership card for the VFW, DAV, or American Legion
DD Form 214
How Veterans Can Use the Funds From a VA Business Loan?
Veterans can use VA business loan funds in multiple ways, depending on the type of loan that they’ve chosen.
Lines of credit: are highly flexible options that allow veterans to repeatedly draw down and repay that funding over a short term period. Veterans can use lines of credit for nearly any expense, including navigating times of limited cash flow, equipment purchases, and other business investments.
Term loans: feature a longer repayment term, but offer similar unrestricted potential uses. Veterans might use term loans for larger investments, like renovation expenses, large equipment purchases, large inventory purchases, and other expenses. Term loans are paid out as a lump sum, so they tend to be better for large, one-time expenses.
SBA loans: are available in amounts from $500 to $5.5 million, so they’re often used for significant purchases or investments. A veteran might use a SBA loan for expenses like refinancing debt, purchasing real estate, investing in machinery or equipment, or remodeling or expanding a business space.
Are There Startup Business Loans for Veterans?
There are multiple types of startup business loans for veterans. Some lines of credit are available to businesses that are at least six months old, and they can be used to help business owners navigate those initial years. Some funders like Hivers & Strivers provide startup capital for veteran-owned businesses.
Other resources for veteran-owned businesses
In addition to small business loans, there are many other resources available to veteran-owned businesses. Be sure to look into the following resources, which include training programs and grants and growth resources offered by the government and nonprofit organizations.
Boots to Business: Boots to Business is a SBA training program that’s part of the Department of Defense Transition Assistance Program. It’s available to active duty service members, veterans, and their spouses. The program provides detailed information on entrepreneurship and business ownership.
Women Veteran Entrepreneurship Training Program: The Women Veterans Entrepreneurship Training Program offers both in-person and online training for women veterans who hope to start or who are running businesses in Texas. Veterans can participate in webinars, workshops, and training sessions, receive one-on-one advising, and apply for business loans.
Service-Disabled Veteran Entrepreneurship Training Program (SDVETP): The Service-Disabled Veteran Entrepreneurship Training Program offers service-disabled veteran entrepreneurs training to prepare them for business ownership. The programs are offered through grantees, including St. Joseph’s University and Dog Tag, Inc.
StreetShares Foundation: The StreetShares Foundation is a nonprofit that inspires, educates, and supports the military entrepreneurial community. StreetShares help to connect veterans with capital opportunities, coaching and networking, educational opportunities, and access to mentors. The services are available to military community entrepreneurs nationwide, and they help entrepreneurs to start and grow their businesses.
The Global Good Fund Veterans Leadership Program: The Global Good Fund Veterans Leadership Program is a year-long leadership development program that is available to veteran entrepreneurs. During the program, veterans develop leadership skills through pairings with executive coaches and c-suite business mentors. Veterans also have access to leadership assessment resources, a global peer network, and $10,000 of targeted funding.
Veteran entrepreneurs and business owners have access to many different business loans and funding opportunities. From programs designed specifically for veterans to options like short term loans and working capital, these resources can help veterans to build and expand their businesses. As with any funding opportunity, it’s important to consider factors like interest rates and terms when finding the loan that’s right for you and your business.