Best Veteran Small Business Loans
The VA doesn’t offer business loans. But many traditional banks, online lenders and credit unions offer fee discounts and perks for veteran borrowers.
Best veteran small business loan lenders: More details
Does the VA offer small business loans?
The Department of Veterans Affairs (VA) doesn’t offer small business loans directly. However, there are many other entrepreneurship resources available to veterans.
If you need funding to start or grow a business, there are other businesses and organizations that offer loans for veterans.
Veteran small business loan options
There are several reputable sources for veterans seeking business loans, each with its unique pros and cons and eligibility requirements. Below, we provide an overview of these sources so you can find the right lending source for your specific needs and business goals.
SBA 7(a) loans
The SBA 7(a) loan program isn’t specific to veterans. Still, it can be a good resource for veteran entrepreneurs due to its high borrowing limits — the maximum loan amount is — and flexibility in how the funds are used.
The SBA doesn’t lend money directly, but instead guarantees a portion of the loan made by an SBA-approved lender, reducing the risk and making them more willing to lend to small businesses.
You can use an SBA 7(a) loan to:
- Build or buy commercial real estate
- Provide working capital for your business
- Purchase equipment, machinery, furniture, fixtures, inventory or other supplies
- Start a new business or buy an existing one
- Refinance existing business debt
SBA Express loans
An SBA Express loan is another type of loan backed by the SBA. Like SBA 7(a) loans, they’re not specific to veterans and you can only access them through SBA-approved lenders. However, their appeal is that they offer an accelerated turnaround time, with applicants receiving a response from the SBA within 36 hours of application submission.
The maximum loan amount is .
SBA microloan
The SBA microloan program provides loans of up to to help small businesses and certain types of not-for-profit childcare centers cover start-up and expansion costs. Like other SBA loans, these microloans are backed by the SBA. However, nonprofit community lenders administer the program by managing loan applications and providing funding.
You can use an SBA microloan for:
- Working capital
- Buying inventory or supplies
- Purchasing furniture, fixtures, machinery, or equipment
However, you cannot use microloans to pay off existing debts or purchase real estate.
Military reservist economic injury disaster loan (MREIDL)
The Military Reservist Economic Injury Disaster Loan is an SBA-backed loan program designed to provide financial support to small businesses. To qualify, businesses must show that they cannot meet their operating expenses because an essential employee was called to active duty as a military reservist.
MREIDL offers a maximum loan amount of $2 million, with interest rates set at 4% and repayment terms extending up to 30 years. However, the amount a business can borrow is limited to the actual economic injury calculated by the SBA. These loans are not designed to compensate for lost income or profits, and they can’t be used to refinance debts or expand the business.
Bank and credit union business loans
Many traditional banks and credit unions offer business loans tailored to veterans, frequently providing additional benefits or incentives, such as reduced interest rates or waived fees. However, these loans often come with stricter qualifying requirements than you might find with other lenders, so they’ll likely be a better fit for more established businesses.
Online business loans
Online business loans are offered by lenders that operate primarily or exclusively over the internet, which cuts down on their operating costs and often allows them to offer more lenient eligibility standards. Online lending platforms also typically provide a streamlined and efficient application process. However, you may find that these lenders will charge higher rates and fees than more traditional financial institutions.
Who qualifies for a veteran small business loan?
Eligibility for veteran small business loans can vary depending on the specific loan program and the lender. However, some common business loan requirements include:
- Veteran ownership. The majority ownership (at least 51%) of the business must be held by individuals who are veterans, active-duty military members or their spouses. In some cases, opportunities for government contracts or assistance are also available to widowed spouses of veterans or service members who died in service or from a service-connected disability.
- A for-profit business operating in the United States or its territories. Nonprofit organizations and foreign entities generally aren’t eligible for these types of loans.
- Ability and intention to repay the loan. Lenders will typically evaluate your ability to repay the loan by reviewing your personal and business credit history, business plan and financial projections.
How to get a business loan as a veteran
Funding isn’t the only thing veteran businesses need to be successful. The following resources can offer veteran entrepreneurs valuable guidance, training and networking opportunities to help them navigate the business landscape more effectively.
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Veteran Business Outreach Centers (VBOC)
The VBOC program, administered by the SBA, offers a variety of resources tailored to support veteran entrepreneurs, including business training, referrals to resources, mentorship programs and assistance in developing business plans. Find your local Veterans Business Outreach Center. -
VetCert
VetCert helps veteran-owned businesses compete for contracts with the Department of Veterans Affairs. Get started by registering for a MySBA account. -
Boots to Business (B2B)
The SBA’s Boots to Business program offers veteran entrepreneurship training programs. It’s open to active-duty service members, veterans and their spouses. Find the upcoming course schedule and register for classes on the B2B page. -
Service-disabled veteran-owned small business program
The Service-Disabled Veteran-Owned Small Business (SDVOSB) is a program of the federal government that aims to award at least 5% of all federal government contracting dollars to service-disabled veteran-owned small businesses each year. You can self-certify your business as an SDVOSB by updating the status of your business at SAM.gov. -
Women Veteran Entrepreneurship Training Program (WVET)
WVET offers comprehensive training, mentorship and support services to guide women veterans operating small businesses in Texas. It also offers business loans ranging from $500 to $500,000.
Grants for veterans
The Second Service Foundation is a grant program designed specifically for veterans. By providing grants, it helps veterans start or expand their businesses.
In addition to the Second Service Foundation, several federal government agencies and private corporations offer small business grants for veterans. Federal grants tend to be competitive and are often linked to specific industries or objectives, such as technology development, environmental conservation or community development.
Similarly, private companies offer grant programs, often aligning with corporate social responsibility goals. These grants can provide the necessary financial boost for veteran-owned businesses, driving innovation and growth.
How to get a business loan as a veteran
Navigating the process of getting a business loan can seem daunting at first. However, when you understand the necessary steps involved and what each one entails, it becomes significantly more manageable. Below are some crucial steps to guide you toward a successful loan application process.
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Review your options
Numerous loan options are available to veteran entrepreneurs, including SBA loans, traditional bank loans and alternative lending options. Each option has unique eligibility criteria, interest rates and terms. Reviewing these options and selecting the most suitable one is a critical part of the process. -
Gather the required documents
Next, gather the documents you must submit with your loan application. These may include personal and business financial statements, bank statements, a business plan and recent tax returns. -
Compare rates
Rates can vary widely from lender to lender — even for the same type of loan. Make sure to shop around with a few different lenders to compare rates, fees and other terms. -
Apply
Once you find a loan with the right rate and terms, the next step is to fill out the loan application and submit all required documents. Then wait to hear whether your application is approved.
Frequently asked questions
The Department of Veterans Affairs (VA) doesn’t offer business loans directly. However, it does offer programs and partnerships, including Boots to Business and the Women Veteran Entrepreneurship Training Program, that aid veterans in obtaining the financing they need.
Business loan interest rates are set by the SBA-approved lenders issuing the loans. However, they are subject to SBA maximums.
Those maximum rates depend on the loan amount, loan term and either the prime rate, LIBOR rate or the optional SBA peg rate in effect when the loan is taken out. Currently, rates range from on variable-rate loans and on fixed-rate loans, based on the current prime rate of .
The SBA doesn’t set a minimum credit score — each lender can set their own minimum credit score requirements. However, having a credit score of 680 or higher gives you a better chance of getting approved for a loan.
Yes, getting a veteran business loan with bad credit is possible. Various lenders have different credit requirements — some are more lenient, while others are stricter. However, having a poor credit score can increase the difficulty of getting approved for a loan and may result in less favorable loan terms.
The degree of difficulty behind getting a business loan as a veteran varies based on several factors — these include your personal and business credit score, cash flow and the strength of your business plan.
Fortunately, a variety of programs and initiatives are in place to support veteran entrepreneurs, including providing training, mentorship and help in creating a strong application.
Our methodology: How we chose the best veteran small business loans
We reviewed more than 35 banks, credit unions and online lenders to determine the seven best veteran small business loan providers.
Lenders that made the list needed to have these features:
- Prioritizes veteran borrowers: We looked for lenders who specifically cater to veteran borrowers, often offering them perks like reduced interest rates or fewer fees.
- Offers business loans with competitive terms: We focused on loan offerings with low interest rates and few fees.
We also considered each lender’s reputation, business practices and products offered to determine the best option for specific business owners. For example, when looking for SBA loans, an SBA Preferred Lender offers faster funding speeds, while large loan amounts are more of a determining factor for commercial real estate loans.