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Small Business Loans for Veterans With Good & Bad Credit

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Small Business Loans for Veterans With Good & Bad Credit

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How to Apply for Small Business Loans for Veterans

Are there business loans for veterans?

Veterans have access to resources that can help them find a business loan. For example, credit unions such as Navy Federal are established specifically to help service members and veterans. Furthermore, veteran support groups, grants, and other resources are available exclusively to help veteran business owners. The VA nor the SBA offer special loans for veterans, but they are more than willing to pay their respect by pointing veterans in the right direction. Veterans now writing their chapter as business owners should visit mySMBscore to gain actionable insights about steps they can take to qualify for a business loan. 

What is a VA small-business loan?

The VA (Veterans Affairs) office does not offer business loans. But, occasionally, you may hear loans referred to as VA small business loans. This could refer to various things, such as a loan that the VA helped facilitate by recommending lenders or a grant. Conversely, the SBA offers initiatives, including the Veterans Advantage Program, which can waive initial fees for specified loans. Veterans looking for business loan resources can visit the SBA page dedicated to helping veteran business owners. 

Small Business Lenders For Veterans

  • OnDeck - This is a great lender for fast business loans, you may receive funding next day. In addition, this lender offers short term loans as well. The minimum credit score is 625, great for veterans with a decent credit score looking for a fast short term loan.
  • Fundation - This lender is a great option for veterans looking for long terms, 15 months, no prepayment penalties, and ability to borrow up to $500k.

Who qualifies for a VA small-business loan?

The first requirement to qualify for most loans designed for veterans only is that your business is 51% majority owned by a veteran or the spouse of a veteran. People who fall into this category could include:

  • An active-duty service member who is a part of the Transition Assistance Program
  • Disabled or honorably discharged veterans
  • Active National Guard members or those in the reserves
  • Spouse or widowed spouse of the following groups

Aside from these requirements, you’ll also need to meet the financial qualifications outlined by the lender (which can vary). These can often include:

●  A minimum credit score - One of the key requirements for loan approval is a good credit score. The better a borrower’s credit score is, the more likely they’ll be approved and access the best interest rates.

●  Detailed business plan - Some lenders require a clear business plan before approving your loan application. This business plan should outline how you plan to repay the loan, what you’ll use the money for, and how it’ll impact your company’s growth.

●  Collateral - If you’re looking to obtain a secured business loan, you’ll have to put up some collateral if you can’t repay your loan. In this case, the bank will seize your collateral.

Does the VA give out business loans?

The Department of Veteran Affairs does not give out business loans. While they do offer loan programs for VAs looking to obtain a mortgage, there are no business-related programs.

What are my veteran business loan options?

Veterans seeking a business loan have several options through the Small Business Association, online lenders, community programs, and traditional banks and credit unions. Each option has pros and cons, and taking the time to explore the terms and conditions available will help you make the best decision for your business. While veterans may have some advantages, when it comes to loans, they will need to follow the same steps taken by traditional businesses. 

How hard is it for a veteran to get a business loan?

Veterans can face challenges getting approved for a loan, although it is illegal to discriminate based on someone’s veteran status. Unfortunately, sometimes lenders can see veterans as higher-risk borrowers, as they’ll often have less experience running a business. While it’s not hard for veterans to get a business loan, they should still meet the requirements outlined by their lender to qualify. Veterans should understand how a lender will view them in the financial space. To better understand what a lender will consider when approving a business loan, visit mySMBscore. With access to personalized recommendations and explanations, you can improve your position when applying for a business loan. 

How can a veteran get money to start a business?

Veterans have several options they can utilize to get funding for a business. Outside of  SBA loans, you can also seek loans through online banks that cater to veterans. Online lenders will generally require you to be in business for at least six months, making it a more readily available option for newer business owners. Another benefit of using online lenders is their ability to quickly transfer funds once approved, giving you access to money within a few days sometimes. This is an excellent feature for those who need funding fast.

Additionally, traditional banks sometimes offer incentives and benefits to veterans looking for a small business loan. While they can have stricter approval rates and longer turnaround times, they often have competitive rates and terms for those who qualify.

You could opt for a personal loan or a business credit card if you cannot qualify. These financing options are based on the borrower's personal finances and can provide funds for those who can’t qualify through traditional startup business loans.

How much can I get for a VA small business loan?

The amount veterans can borrow will ultimately depend on which loan product and lender they decide to go with. The SBA 7(a) loan program can loan up to $5 million. In comparison, online lenders or private institutions will have different lending limits based on the applicant's qualifications but can range from a few thousand up to $500,000. Grants may also be available to help veterans get the funds they need to start and or operate their businesses. Veteran or not - you’ll need to qualify for the loan. To understand what you might qualify for or what a reasonable amount to request is - start by checking your SMB score. 

What are some tips for comparing small business loans for veterans?

Picking the right lender for your small business loan is a big decision. As you compare your loan options, here are some tips for picking which lender is right for you:

●  History of working with veterans - As a veteran, you want to feel confident that your lender understands your history and background as a service member. Lenders that offer specialized loan programs or incentives can be a great fit for small business loans.

●  Reputation - How has the experience been for current or previous clients? It’s always recommended to check out public reviews and see their public reputation.

●  Turnaround time - As you shop for a lender, confirm their turnaround times for your application approval and the time until funds reach your account. Certain programs like the SBA loans can take several weeks before you’ll get your funding, while online lenders can usually provide funds within a few days.

  Customer support - If you have questions or concerns about your loan, you will want your lender to offer reliable customer support. Before signing on the dotted line, ensure you feel confident in their ability to help if you have questions.

  Rates and fees - Always read the fine print regarding your loan. There can be hidden fees or charges like an origination fee or underwriting fee that will increase your cost to borrow. One of the benefits of SBA loans is the reduced or eliminated fees for the loan.

What are the small business grants available to veterans?

Outside of traditional lending products, several grant programs are available to help veterans obtain funding for a business. Some well-known ones include:

●  Second Service Foundation - This nonprofit organization was created in 2016 to support veteran entrepreneurs. Their military Entrepreneur Challenge grant program provides funds for veterans looking to start or grow a business.

●  Warrior Rising - Catered to “vetrepreneur” this nonprofit has a startup-specific grant to help high-potential business owners reach the next step of their business.

Outside of these programs, there are several development programs and resources available for free to veterans. Programs like the Veterans Business Outreach Centers and the Service-Disabled Veteran-Owned Small-Business Program are government-backed and benefit veteran business owners. 

What credit score is needed for a VA business loan?

As we discussed earlier - the VA does not offer business loans. However, they may be able to provide resources to help veterans find a business loan. The SBA offers initiatives that can help reduce the fees of a business loan. Regarding credit score, requirements should be the same regardless of your veteran status. Unfamiliar with your credit score as a business owner? View your SMB score now to view your score and learn about various components that can affect eligibility. After all, lenders will likely look at more than just a credit score when approving a loan. Being familiar with all of the elements can give you a competitive advantage when securing a loan with competitive terms. 

Can I get a veteran business loan with bad credit?

While each lender will have individual requirements for their loan programs, most will require a credit score of at least 680 to qualify. Veterans looking to obtain funding but with a lower credit score can seek out online lenders, which generally have more flexible requirements for their lending programs.

If you’re looking for actionable ways to improve your credit score, mySMBscore can help. We’ll provide a business score  that allows you to view your credit through the lens of a lender, helping you identify necessary improvements to improve your loan application.

How do you apply for a veteran small business loan?

The first step in applying for a veteran small business loan is getting pre-qualified and then shopping around for the best terms and conditions for your financial situation.

Once you’ve decided which option is best for you, you should take some time to gather the relevant documents that are needed for the application. This could include tax returns, balance sheets, financial statements, etc. Make sure to have these ready to submit as you apply to avoid any delays with obtaining your funding. If you’re applying for a veteran-specific loan, ensure you have the appropriate paperwork to confirm your veteran status so the application is not delayed.

Considering a business loan? Access your SMB score to determine eligibility and identify improvements!

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