Small business loans can be a big help for veterans looking to start or grow their companies. These loans offer special perks and benefits for those who have served in the military. You can get money to buy equipment, hire staff, or even cover other business costs!
In this quick guide, we’ll explore VA small business loans, including their benefits, types, eligibility criteria, and steps to apply, aiming to empower veteran entrepreneurs on their journey to business success after military service.
FAQ
What credit score do you need for a VA small business loan?
What is the maximum VA small business loan amount?
Does the VA help you start a business?
How much is the SBA loan fee for veterans?
Create your online store in minutes!
Looking to sell online? Develop and launch your store with 10Web AI Ecommerce Website Builder.
Types of VA small business loans
There are several types of loans available for veteran-owned businesses. These loans provide financial support to help veterans start or grow their businesses. Below is a breakdown of some of these loan options.
- SBA 7(a) loan program: This is the most common loan program. It offers flexible terms and can be used for a variety of business purposes, such as working capital, equipment purchase, or real estate.
- SBA Express loans: These loans provide faster application processes and quicker access to funds. They are suitable for smaller funding needs.
- SBA Veterans Advantage program: Under this program, veterans can benefit from reduced fees on SBA loans. This can make borrowing more affordable for veterans who meet the eligibility requirements.
- Service-Disabled Veteran-Owned Small Business program: This program offers opportunities to veterans with a service-related disability. They may qualify for federal contracts, which can provide a steady source of revenue.
- Microloans: These are smaller loans typically up to $50,000. They are ideal for businesses that need less capital to get started or expand. They often have lower interest rates compared to other loan types.
These loan options can help veterans access the funds they need to succeed in their business ventures. Each option comes with its own set of terms and eligibility criteria, so it’s important to research and match the right loan to the business’s specific needs.
Choosing the right funding option
Choosing the appropriate funding option for a VA small business loan can significantly affect a business’s operations and growth. It’s essential to align the loan type with your business needs, understand the application process, and meet credit requirements.
Business needs
When selecting a VA small business loan, it’s important to identify what are your business’s long- and short-term goals. Different loans cater to various needs, such as equipment purchase, real estate acquisition, or working capital. For instance, the SBA 7(a) loan offers versatile funding that can support many business purposes.
Consider the loan amount and repayment terms. Some loans offer amounts up to $2 million with terms extending to 30 years, which can accommodate larger projects. Shorter loans might be more suitable for immediate, smaller expenses. Ensuring alignment between needs and loan features can optimize financial results.
Application process
The application process for VA small business loans can vary depending on the lender and loan type. Generally, working with the SBA or a bank, applicants need to prepare documentation such as business financials, tax returns, and personal credit history. Some lenders, like the SBA, may require additional paperwork to verify veteran status.
Steps often include completing forms and gathering paperwork to demonstrate financial stability. It may involve providing a clear business plan. Preparing an outline of your business model and financial projections shows lenders your capability to repay.
Being thorough in assembling the required materials can make a significant difference in the approval process. Persistence and attention to detail often lead to better chances of securing the loan.
Credit requirements
Lenders will evaluate creditworthiness when assessing VA small business loan applications. Understanding these credit requirements is crucial for applicants. Generally, a good credit score may enhance approval prospects and influence the interest rate offered.
Some loans, such as the SBA Express loan, provide fee discounts for veterans, potentially easing the financial burden. Applicants should be prepared to provide personal and business credit histories.
If credit scores are on the lower side, focusing on improving credit can be beneficial. This includes paying down current debts or correcting any errors on a credit report. Knowing these requirements helps businesses prepare and succeed in their loan applications.
Create your online store in minutes!
Looking to sell online? Develop and launch your store with 10Web AI Ecommerce Website Builder.
How to apply
Applying for a VA small business loan involves understanding eligibility requirements, gathering necessary documents, evaluating lender options, and familiarizing oneself with the review process. Each step is crucial for a successful application.
Eligibility criteria
Eligibility for VA small business loans typically focuses on whether the business is veteran-owned and meets other criteria set by the VA and participating lenders. Applicants need to show proof of veteran status, such as discharge papers or a veteran ID.
Businesses must also be small according to the SBA’s size standards, which vary by industry. It is important for applicants to check these criteria early to ensure they qualify.
Some loan programs may have additional requirements, such as demonstrating the business’s ability to repay the loan or having a minimum credit score. For example, some lenders might require a credit score of at least 620. Understanding these requirements can increase the chances of approval.
Preparing the necessary documentation
Preparing documentation is a key part of the application process. Applicants will need to gather and submit several documents, such as business plans, tax returns, and bank statements. These documents help lenders assess the financial health and viability of the business.
A detailed business plan should outline goals, projected revenue, and how the loan will be used. Tax returns, typically for the past two to three years, provide insight into the business’s financial history. Having up-to-date financial statements, like profit and loss statements, balance sheets, and cash flow projections, can strengthen the application.
Some specific programs, like the VA small and veteran business programs, may require additional certifications or forms. Applicants should ensure all documents are accurate and complete.
Evaluating lender options
Choosing the right lender is an important decision in obtaining a VA small business loan. Lenders may include national banks, regional banks, and credit unions. Each lender sets its own terms and interest rates, which can affect the overall cost of the loan.
Applicants should compare at least three lenders to find the best fit for their business needs. Variables to consider include interest rates, repayment terms, and lender fees. Online reviews and recommendations from other veteran-owned businesses can also be helpful.
Some lenders may have specific experience working with veterans, which can simplify the process. It’s wise for applicants to reach out and ask questions to better understand what each lender offers.
Understanding the review process
The review process for a VA small business loan can take time, depending on the lender and the complexity of the application. After submitting the application, lenders will review the provided documents and assess the business’s financial health.
Lenders may request additional information or clarification on certain documents. Responding promptly to these requests can help speed up the review. The decision-making process varies but generally takes between two weeks to two months.
Once the review is complete, applicants receive notification of approval or denial. If approved, the lender will outline the loan terms and next steps. If denied, the applicant can ask for feedback or consider reapplying in the future.
10 VA small business loans to help you start your business
If you’re looking to start a business as a veteran, several loan options can provide the funding you need to get off the ground. Here are 10 small business loan programs, including government-backed and private lenders, that offer flexible financing to support entrepreneurs at different stages of growth.
SBA microloan program
The SBA microloan program offers small loans to help businesses start up and grow. You can borrow up to $50,000, but most loans are around $13,000. These loans are great for new or small businesses that need a bit of money to get going.
The SBA works with special lenders to give out these loans. These lenders are nonprofit groups that know a lot about lending and helping small businesses. They’re there to help you through the process.
Microloans can be used for many business needs. You might use one to buy supplies, equipment, or inventory. You can also use the money for working capital to keep your business running day-to-day.
Interest rates on microloans are pretty good. They usually range from 6% to 9%. This makes them a good choice if you can’t get a loan from a regular bank.
| Pros | Cons | Funding Maximum | Eligibility |
| Low interest rates | Small loan amounts | $50,000 | Small businesses |
| Good for startups | May need collateral | Nonprofit childcare centers |
Kabbage line of credit
Kabbage offers a flexible line of credit for small businesses. You can borrow between $1,000 and $150,000. The application process is quick and easy. You can get approved in minutes.
Kabbage uses technology to look at your business data. This helps them decide if you qualify. They don’t just look at your credit score.
The repayment terms are 6, 12, or 18 months. Interest rates vary based on the term length. Shorter terms have lower rates.
You only pay interest on what you use. There’s no cost to keep your line open. You can draw funds as needed.
Kabbage is now part of American Express. This gives them more resources to serve small businesses.
| Pros | Cons | Funding maximum | Eligibility |
| Fast approval | Higher rates for longer terms | $150,000 | 1+ year in business |
| Flexible borrowing | Monthly fees | $50,000+ annual revenue |
Fundbox business loan
Fundbox offers a business line of credit for small businesses. You can borrow between $1,000 and $150,000 based on your creditworthiness. The application process is quick and easy.
Fundbox uses technology to review your business data and make fast lending decisions. You can get funds as soon as the next business day if approved.
The line of credit works like a credit card. You only pay interest on what you borrow. Repayment terms are 12 or 24 weeks.
| Pros | Cons | Funding Maximum | Eligibility |
| Fast funding | Higher rates than banks | $150,000 | 3+ months in business |
| Easy application | Short repayment terms | $100,000+ annual revenue | |
| No prepayment fees | Weekly repayments | 500+ credit score |
Fundbox is good for new businesses that need quick access to cash. The flexible line of credit can help with short-term cash flow needs.
The lender looks at your business data instead of just credit scores. This can help you qualify even with less-than-perfect credit.
OnDeck term loan
OnDeck offers short-term business loans for small companies. They provide funding from $5,000 to $250,000 with terms up to 12 months.
You can apply online in minutes and may get same-day funding if approved. OnDeck uses a simple application process and looks at your business performance, not just credit scores.
We like that OnDeck has fast funding and flexible requirements. Their U.S.-based loan advisors can guide you through the process.
We don’t like their potentially high interest rates. Loans may be expensive compared to traditional bank loans.
We chose OnDeck because they specialize in quick funding for small businesses that may struggle to get bank loans.
OnDeck works best for established small businesses that need fast cash for short-term needs like inventory or marketing.
| Pros | Cons | Funding Maximum | Eligibility |
| Fast funding | High rates | $250,000 | 1+ year in business |
| Easy application | Short terms | $100K+ annual revenue | |
| Flexible requirements | 500+ credit score |
Bluevine invoice factoring
Bluevine offers invoice factoring for small businesses. This service lets you get cash for unpaid invoices quickly. You can qualify for funding based on your outstanding invoices.
With Bluevine, you can get 80-90% of your invoice amount upfront. This gives you fast access to cash, often in less than 24 hours. The minimum invoice amount is $5,000, but you can factor invoices up to $5 million.
To use Bluevine’s invoice factoring, you apply online. If approved, you can draw funds from your account whenever needed. Your first draw must be at least $5,000. After that, you can take out as little as $500 at a time.
You’ll repay the funds through automatic weekly or monthly payments. The repayment term is 6-12 months, depending on your agreement.
| Pros | Cons | Funding maximum | Eligibility |
| Fast funding | Minimum $5,000 first draw | $5 million | Based on invoices |
| Flexible draws after first | Automatic repayments |
Create your online store in minutes!
Looking to sell online? Develop and launch your store with 10Web AI Ecommerce Website Builder.
Lendio loan marketplace
Lendio is a loan marketplace that connects small businesses with lenders. You can apply for various types of funding through their platform.
Lendio works with over 75 lenders to offer financing options. This gives you a better chance of approval and more choices.
The application process is simple. You fill out one form and Lendio matches you with potential lenders.
Lendio’s service is free to use. They make money from lenders, not borrowers.
You can get help from a Lendio representative if needed. They offer phone support on weekdays.
Lendio has good reviews from customers. Many praise the ease of use and helpful staff.
The company is rated A+ by the Better Business Bureau. This shows they have a good track record.
| Pros | Cons | Funding Maximum | Eligibility |
| Many lender options | Not a direct lender | Varies by lender | Varies by lender |
| Free to use | May get many offers | ||
| Good customer service |
Accion Opportunity Fund
Accion Opportunity Fund helps small businesses get loans. They offer money to people who might not get loans from other places. This includes women, people of color, and immigrants.
You can apply for a loan online or by phone. Loans range from $5,000 to $250,000. The terms are clear, and you won’t pay extra for paying off your loan early.
Accion Opportunity Fund likes to support businesses that help their communities. They also provide resources and advice to help your business grow.
One downside is that you need to be in business for at least a year to qualify. Your business also needs to make at least $50,000 a year in sales.
We chose Accion Opportunity Fund because they focus on helping underserved groups. They aim to make the economy fairer for everyone.
This lender is best for small business owners who have trouble getting loans elsewhere. If you’re just starting out or have less-than-perfect credit, they might be a good fit for you.
| Pros | Cons | Funding maximum | Eligibility |
| Supports underserved groups | Must be in business for 1 year | $250,000 | $50,000+ annual sales |
| Clear terms | Minimum sales requirement | 20%+ business ownership | |
| No early payment fees |
Rapid Finance short-term loan
Rapid Finance offers small business loans with quick funding. Their short-term loans can help you get fast cash for your business needs.
You can borrow from $5,001 up to $1 million with Rapid Finance. Loan terms range from 3 to 60 months. This gives you flexibility to choose a repayment timeline that fits your budget.
Short-term loans work well if you need fast working capital. They’re good for covering unexpected costs or taking advantage of time-sensitive opportunities.
The application process is simple. Rapid Finance looks at your business’s overall financial health, not just credit scores. This may help you qualify even with less-than-perfect credit.
| Pros | Cons | Funding Maximum | Eligibility |
| Fast funding | Higher rates than banks | $1 million | 3+ months in business |
| Flexible terms | Short repayment periods | $5,000+ monthly revenue |
StreetShares business loans
StreetShares offers small business loans and lines of credit for entrepreneurs. They focus on serving veterans and military-connected business owners.
You can get term loans from $2,000 to $250,000 with StreetShares. Loan terms range from 3 to 36 months. Interest rates start at 8% and go up to 39.9% APR.
StreetShares has some good points. They have a low minimum credit score of 540. You only need 1 year in business and $75,000 yearly revenue to apply.
There are some downsides too. The maximum loan amount is lower than some other lenders. StreetShares also charges origination fees of 3.95% or 4.95%.
StreetShares stands out for its focus on veteran-owned businesses. If you’re a veteran entrepreneur, this lender may be a good fit for your funding needs.
| Pros | Cons | Funding Max | Eligibility |
| Low credit score minimum | High max interest rate | $250,000 | 540+ credit score |
| Veteran-focused | Origination fees | 1+ year in business | |
| No prepayment penalties | Lower max loan amount | $75,000+ annual revenue |
SmartBiz SBA loans
SmartBiz helps small businesses get SBA loans. They connect you with lenders for loans from $50,000 to $500,000.
SmartBiz makes the loan process easier. They guide you through paperwork and match you with banks. This can save you time and stress.
You can use these loans for many business needs. This includes buying equipment, refinancing debt, or getting working capital.
The interest rates are lower than some other options. Rates range from 10.75% to 14.5%. You get 10 years to pay back the loan.
Veterans may qualify for special SBA microloan programs. These offer up to $50,000 for very small businesses.
One drawback is that you can’t use the loans to buy real estate. Also, getting approved can take time.
SmartBiz is good for established small businesses looking for affordable funding. They’re not ideal for startups or those needing quick cash.
| Pros | Cons | Funding Maximum | Eligibility |
| Lower interest rates | Can’t buy real estate | $500,000 | Established businesses |
| Long repayment terms | Approval takes time | ||
| Guidance through process |
Create your online store in minutes!
Looking to sell online? Develop and launch your store with 10Web AI Ecommerce Website Builder.
Conclusion
VA small business loans offer invaluable support to veterans aiming to start or expand their businesses. With a variety of loan options like the SBA 7(a) Loan Program, SBA Express Loans, and microloans, veterans can find funding that suits their specific needs—be it hiring staff or covering operational costs. Understanding the eligibility criteria, preparing the necessary documentation, and choosing the right lender are crucial steps in the application process.
By leveraging these specialized loan programs and resources, veteran entrepreneurs can successfully transition from military service to thriving business ownership, contributing to economic growth and their own financial independence.
Create your online store in minutes!
Create your online store in minutes!
Develop and launch your store with 10Web AI Ecommerce Website Builder.
