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etting a business funded is one of the most challenging parts of starting a small business. For veterans looking to integrate back into civilian life, starting a small business can be an exciting endeavor. After all your years of service to your country, you may wonder if there are specialty business loans for veterans.
Veterans are 45% more likely to start small businesses, and one in 10 is veteran-owned. While the VA itself doesn't offer veteran business loans, there are plenty of options available for you to get your business funded and join the ranks of veteran entrepreneurs.
What is a small business loan?
A small business loan is money lent to an entrepreneur to start, manage, or expand a business. These loans can be sourced from traditional banks, credit unions, online lenders, or government programs. In return for the loan, the borrower agrees to repay the loan amount with interest over a specified period.
Are there small business loans for veterans?
Yes! There are quite a number of small business loans for veterans. They range from government loan programs to traditional loans and specialized grants from programs dedicated to helping veterans make the most of civilian life. These unique programs often offer favorable terms, reduced fees, and additional support tailored to the unique needs and experiences of veterans.
What are the best small business loans for veterans?
Navigating the world of business financing can be challenging for any entrepreneur, but as a military veteran, you can take advantage of a range of specialized programs designed to help you succeed.
SBA programs for veterans
The SBA—Small Business Administration—provides loans for all types of small businesses across the United States. With respect to veterans, the SBA has several programs that offer help.
Veterans Advantage program
The Veterans Advantage program aims to make it easier and more affordable for veterans to start or grow their businesses. Its key features include:
- No fees on loans up to $125,000
- Reduced fees on loans up to $350,000
- 85% SBA guarantee for loans up to $125,000
- 75% SBA guarantee for loans up to $350,000
The Veterans Advantage program loan is associated with the SBA 7(a) loan, which is the SBA's primary and most popular program. Its popularity and preferential terms make it an excellent choice for business loans for veterans.
Boots to Business program
Boots to Business is an entrepreneurial education and training program the SBA offers as part of the Department of Defense's Transition Assistance Program—TAP. The program's primary goal is to provide participants with the tools, resources, and knowledge needed to identify business opportunities, draft a business plan, and launch a small business.
If you're unsure where to begin, Boots to Business will introduce you to a wide array of SBA resources, which can help in various stages of your business development from conceptualization to funding.
Veteran Business Outreach Center (VBOC)
If you're looking for additional guidance in getting your small business started, including getting a veteran business loan, the VBOC is designed to be a one-stop shop for you. It offers workshops, training, counseling, and mentorship opportunities unique to your area.
To get started, locate a Veteran Business Outreach Center near you and contact them to get information on workshops, mentoring, funding, and any other services your regional branch offers.
Hivers and Strivers Capital
Established by West Point graduate Doug Doan, Hivers and Strivers Capital is an early-stage investment group focusing exclusively on investing in veteran-led companies. It offers investments that range from $100K to $1 million to what it calls "profound companies led by U.S. military veterans." Some of its most significant investments include:
- True Made Foods
- SquareDash
- OutFit
- FAND
- Independence Hydrogen
Beyond financing, Hivers and Strivers Capital also utilizes its extensive network and resources to help veterans with:
- Introductions that open doors to strategic partners, service providers, and customers
- Development of strategic planning
- Peer-to-peer networking with other veterans who have faced similar challenges
- Operations that help veteran-led businesses in facilitating operational improvements
Warrior Rising small business grants
Founded in 2015, Warrior Rising is a non-profit organization dedicated to supporting U.S. military veteran entrepreneurs—or "vetrepreneurs" as they call them. Their mission is to empower veterans in achieving success in the world of business. Unlike traditional loan providers or investment groups, Warrior Rising offers a blend of:
- Funding: One of the core offerings of Warrior Rising is the provision of financial grants.
- Education: Besides offering courses on starting and running a business, Warrior Rising's teachers help you understand funding options for your small business.
- Mentorship: Warrior Rising connects veteran entrepreneurs with experienced mentors who often have a history of successful business ownership.
- Community: Beyond just financial support and mentorship, Warrior Rising fosters a sense of community among its members that helps combat mental hurdles that arise when starting a new business.
Overall, Warrior Rising is a wonderful program with its heart in the right place to help veterans use their military experience to succeed in the business world.
Service-disabled veteran-owned small business program (SDVOSB)
The Service-Disabled Veteran-Owned Small Business—SDVOSB—program provides contracting opportunities for small businesses owned and operated by service-disabled veterans. Its objective is to reserve 3% of prime and subcontracting funding available each year for disabled veteran business owners.
With billions of federal contracting dollars available annually, this program can provide significant economic opportunities for qualified veteran-owned businesses and offer a unique opportunity to participate in the federal marketplace actively.
What are the benefits and drawbacks of small business loans?
A truth about any financial instrument is that each one has its own unique set of pros and cons. Before you consider getting a business loan for veterans, consider the following:
Benefits
- Capital infusion: Whether it's to cover startup costs or maintain day-to-day operations, money is the lifeblood of a business, and a small business loan provides countless businesses with much-needed infusions.
- Maintain ownership: Unlike equity financing, where a business sells a stake in the company to raise funds, a loan allows you to retain full ownership.
- Credit building: Timely repayment of a business loan can help in building a solid credit profile for the business, which can be beneficial for future financial endeavors.
- Business growth: With the proper application of funds, a loan can help a business scale up operations, hire more employees, increase inventory, or expand into new markets.
Drawbacks
- Debt obligation: A loan, by nature, is a debt that you're obligated to repay, which can put stress on your finances if your loan doesn't help you generate the returns you expect.
- Interest and fees: Over time, the interest and potential fees associated with a loan can add up, making the cost of borrowing relatively high in some cases.
- Collateral risk: Many business loans require collateral such as real estate or equipment needed to run your business. This means that if you don't repay the loans, the lender can seize the collateral you put up.
While a veteran business loan can provide vital capital required to kickstart your business, it's essential to fully understand the responsibilities that come with your specific loan. Weighing the benefits against the drawbacks, considering alternative financing options, and consulting with financial experts or mentors can help you make an informed decision that best serves your business goals.
Takeaways
From SBA programs to specialized grants, if you served in the military and are looking to venture into the business world, you have many options when it comes to business loans for veterans.
Of course, once you're funded, you'll need somewhere to keep and manage your money. Novo Business Banking solution offers a modern business banking platform that helps you manage your finances from anywhere. Novo also offers competitive terms via Novo Funding to help get your business up and running.
Novo Platform Inc. strives to provide accurate information but cannot guarantee that this content is correct, complete, or up-to-date. This page is for informational purposes only and is not financial or legal advice nor an endorsement of any third-party products or services. All products and services are presented without warranty. Novo Platform Inc. does not provide any financial or legal advice, and you should consult your own financial, legal, or tax advisors.
Merchant Cash Advance products and services are offered by Novo Funding LLC (“Novo Funding”), a wholly owned subsidiary of Novo. Merchant Cash Advances require a Novo checking account.
Novo is a fintech, not a bank. Banking services provided by Middlesex Federal Savings, F.A.: Member FDIC.
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