Posted by Gregory M. Rada | August 22, 2023 | Guest Blog
Military veterans are a major force in our economy. More than 9% of all U.S. businesses are majority-owned by a former service member, and these companies employ more than 5 million people with a total annual payroll of $195 billion.
While veterans choose self-employment more often than their civilian peers, many find it hard to secure business funding. If you’re a vet searching for loan opportunities, here are some helpful tips from our friends at The Kaplan Group.
You may be eligible for favorable business loan terms if you are:
Spouses, including widowed spouses whose service member died in the line of duty or from a service-connected disability, may also qualify. Some funding sources focus on helping veterans of color, female veterans and those with disabilities.
On the personal side, you’ll need a healthy credit score and a solid business history – or, if your company is new, a well-thought-out business plan. You may also need collateral – for example, a home, car or other property that can secure your loan.
Small Business Administration (SBA) loans are open to all eligible business owners, but veterans and their families may benefit from special programs and resources. To qualify for an SBA loan, you must have a for-profit business registered and operating in the U.S. with your own money invested in the business. You must also show that you’re unable to get funding from other sources.
SBA 7(a) loans are the most common form of SBA funding, offering loans of $500 to $5.5 million. This money can be used to fund business expenses, buy real property and in some cases, refinance debt.
SBA 504 loans are long-term, fixed-rate financing of up to $5 million to buy major fixed assets that will create jobs and grow the economy.
Online financing has grown rapidly in recent years, with many lenders offering streamlined loan processing. These loans may be easier to apply for – and if your credit isn’t perfect, you may find it easier to qualify. One possible downside: your interest rate may be higher. However, online loans may allow you to use the funds for any business purpose, making them more flexible.
While the VA doesn’t make commercial loans, local VA staff often connect veterans with business mentors, training resources and technical support. They may know lenders who actively do business with veterans and offer a personal introduction to get you started.