Learn About Small Business Loans for Veterans
If you are a veteran who is running a small business or thinking of setting up a small business, specific veteran loan programs are available to assist you in this process.
These loans come with reduced fees and other benefits to help you make a success of your business.
The best veteran-specific loan programs are found through the U.S. Small Business Administration.
You may be eligible for the Veteran Advantage Program for either an SBA Express Loan or an SBA 7(a) Loan.
If your business is suffering due to an essential employee serving as a reservist, obtain a Military Reservist Economic Injury Disaster Loan to help you get through a difficult time.
In the following helpful overview, learn more about these small business loan programs. Discover whether your small business qualifies for any of these popular loans.
In addition, find out which documentation you must provide to receive approval for a small business loan as a veteran.
Learn About the Veteran Advantage Program for SBA Express Loans
Veterans running small businesses can apply for an SBA Express Loan from the U.S.
Small Business Administration. Although this loan is available to non-veterans as well, the SBA’s special Veteran’s Advantage Program waives all guaranty fees for SBA Express Loans.
Under this loan program, you can borrow an amount up to $350,000. In addition, credit decisions by the SBA take only 36 hours for veteran applicants.
Non-veterans usually wait between five and 10 business days to receive notification regarding the SBA’s credit decision. Furthermore, with an SBA Express Loan:
- You negotiate your interest rate up to the maximum amount permitted.
- You have revolving lines of credit for up to seven years, which include maturity extensions from the outset.
- The lender does not take collateral for a loan up to the amount of $25,000.
- An existing collateral policy can be used for loans between the amounts of $25,000 and $350,000.
Learn About the Veteran Advantage Program for SBA 7(a) Loans
Another SBA loan available to both veterans and non-veterans is the SBA 7(a) Loan Program.
As with the SBA Express Loan, the Veteran’s Advantage Program applies to the 7(a) Loan.
If you qualify, you do not have to pay any upfront guaranty fees for a loan of up to $125,000.
If you wish to borrow more than $125,000 through this program, you receive a 50 percent reduction on the guaranty fees you must pay. In addition:
- Negotiate the interest rate if it does not exceed the maximum amount set by the SBA.
- You can have revolving lines of credit for up to a period of 10 years.
- The lender does not take collateral for loans up to the amount of $25,000.
How to Qualify for the Veterans Advantage Program
To qualify for the Veterans Advantage Program to take out the reduced-fee SBA Express Loan or SBA 7(a) Loan for your small business, you must own at least 51 percent of the business. Veteran applicants must also belong to one of the following categories:
- An active duty military service member who qualifies for the military’s Transition Assistance Program.
- An honorably discharged veteran.
- A reservist or an active member of the National Guard.
- A veteran with a service-related disability.
- A spouse of a veteran from any of the above categories.
- A widow of a service member who died as a result of a service-related disability or while in service.
Learn About Required Documents for the Veterans Advantage Program
To be eligible for the Veterans Advantage Program, provide the SBA with several valid documents.
Acceptable forms of documentation for different categories of veterans include the following:
- Transitioning active duty military members must provide Form DD 2. In addition, active duty military members must provide Form DD 2648 and reserve component members must provide Form DD 2648-1.
- Veterans must provide a copy of Form DD 214.
- Reservists and National Guard members must provide Form DD 2.
- Veterans with service-connected disabilities must provide either Form DD 214 or Department of Veterans Affairs documents that state they have a service-related disability.
- Current spouses of veterans must provide Form DD 214 as well as evidence of being a current spouse.
- Current spouses of reservists, National Guard members or transitioning active duty members must provide Form DD 1173, as well as evidence of being a current spouse.
- Widows of active duty service members who died from a service-related disability or while in service must provide relevant documentation from the DVA or the DOD.
Learn About the Military Reservist Economic Injury Disaster Loan Program
This loan program, known as MREIDL for short, is available to small businesses who have an essential employee who is called up for active duty as a military reservist.
The funds provided by the Military Reservist Economic Injury Disaster Loan Program help small businesses meet their operating expenses.
You are only paid the amount required to ensure your business meets its obligations until the time your employee is released from his or her active military duty.
This loan cannot be used to cover lost profits or income, to expand your business or to pay off regular commercial debt.
Although a business disaster loan lasts up to 30 years, the actual timeframe of your specific loan is based upon your ability to repay the loan amount. The maximum amount you receive is up to two million dollars.
The interest rate on your loan is no more than four percent.
If you have the financial capacity to fund your small business’s recovery, you do not qualify for assistance from the MREIDL program.
When you apply for the business disaster loan, the SBA is required by federal law to examine whether the amount you require is available from a non-government source.
This is because the MREIDL program is subsidized by the taxpayer. To qualify for the loan, you must provide assurance you can repay the loan.
Additionally, if you take out a business disaster loan for an amount that is more than $50,000, you must provide real estate collateral if available.