Ever tried to apply for a loan for your startup and got declined? This can be very common if you are new to the credit world and don’t know much about navigating your way around the intended barriers.

If you are also a veteran starting a small business and have been struggling to get a loan recently, this blog will certainly be a complete guide for you. While many small businesses find it extremely difficult due to the ever-increasing requirements and stricter qualification criteria, those who have the idea and know which route to take, can be much simpler for you to get a small business loan.

Moreover, if you’re a veteran it can be highly possible that being away from the civilian world might have caused you to get a little rusty in the finance sector. But worry not, as we’ve got you covered. Let us discuss today exactly what you’ve got to do in this regard to get veteran small business loans.

Am I Eligible for Veteran Small Business Loans?

If you’ve just come back from the battlefield and are thinking about setting up your business, the first thought that would cross your mind is how to manage the funds, and financing or loans would be the top answer.

If you are wondering whether you qualify or not, do not worry as we’ve got your back. Since you deserve all the happiness and success in life, here is an attempt to clear things for you. While every lender might have some different requirements and qualification criteria, here are some general points that you must check before you apply for any veteran small business loans.

Ownership

The first thing when applying specifically to small business veteran financing is that the business must be owned/run by a veteran. To be able to qualify for this 51% of the ownership of the business should belong to one of below:

  1. An honorably discharged veteran
  2. A disabled veteran (must be disabled during service)
  3. A reservist or member of the National Guard
  4. Active duty military personnel are part of the Transition Assistance Program.
  5. A spouse of any of the above.
  6. A widowed spouse of a service member who died during duty as a result of injuries sustained on the battlefield.

If your business is run by any of the above, you can rest assured that you fulfill this criteria.

Ability To Repay

While there are many ways for you to receive a veteran business loan, you will only get it if you can show on paper and through statistics that your business can repay the amount. The top factor is a sustainable cash flow which is imminent when applying for any type of financing or credit.

A sustainable cash flow paired with a reasonable net disposable income (extra money after all expenses) generated by your business can increase your chances of getting pre-qualified for any type of small business funding.

Decent Credit Score

Applying for any type of credit means directly that you need to have a decent credit score. Based on the scale of your business or business module your application might require you to have a good commercial (business) or even a good consumer (personal) credit score.

You can read this article to understand what is Business Credit Score: How Does It Work?

Types of Veteran Small Business Loans

Several options are available to veterans for their business ventures. Let us have a look at them so you can identify which one is the most suitable for you.

Small Business Administration

The SBA is the first thought when it comes to applying for any type of funding for your business. While you might be thinking that the Veterans Association might come in handy in this regard to many people’s surprise, the small business administration deals in this matter as well.

There are several options available in the SBA. Some of them are mentioned below:

  • The 7(a): This is one of the most commonly known funding options available at the SBA. Not restricted to civilians only, this can also be categorized as veteran small business loans. The financing available under this program is up to $5 million. This is a long-term interest rate loan and for veterans, the vendors might waive off some fees as well.
  • Military Reservist Economic Injury Disaster Loan (MREIDL): This is yet again another reasonable option for veterans. Under this program, you can receive a decent amount of financing of $2 million for businesses with military reservists as an essential employee at a 4% interest rate for around 30 years. The main purpose is to cover operational costs when the military personnel are on duty and away from their business.

Private Sector

If you want higher financing, you might want to try your luck in the private sector. While the requirements might be a lot tougher, the financing amount can also be uncapped or extremely higher than SBA or government grants.

Here are some of the options in the private sector:

Tradition Banks: If your business is booming and your cash flow is pretty decent you can apply for funding with traditional banks. The requirements will certainly be a lot higher but the interest rates will be comparatively low and the financing amount will be high as well.

High-risk lenders: These are also private lenders but the financing amount will be low as the requirements and the interest rates will be much higher.

Advancery: It is a highly known leading firm in the U.S. providing funding and financing to veteran and civilian businesses with sustainable payment plans.

Conclusion

If you are looking for a veteran small business loan, the SBA or private lenders such as Advancery are the best options for you. These will save you from crazy interest rates and provide you with decent financing amounts. Also, the payment tenure can be reasonably longer so that you can focus more on growing your business rather than getting worried about repaying your financing amounts.