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 $5,000,000 — and flexibility in how the funds are used.
The SBA doesn’t lend money directly but 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 $500,000.
SBA microloan
The SBA microloan program provides loans of up to $50,000 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
You can’t 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 that 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. They’re not designed to compensate for lost income or profits and can’t be used to refinance debts or expand the business.
Bank and credit union business loans
Credit unions and traditional banks generally do not offer specific veteran business loans. However, some banks or credit unions may offer additional benefits or incentives to veteran-owned businesses, such as reduced interest rates or waived fees.
Here are a few to consider.
- Navy Federal Credit Union. Navy Federal Credit Union caters specifically to people with ties to the armed forces, Department of Defense or National Guard. They offer a variety of resources to veteran business owners, including SBA loans, competitive loan rates, low fees and payroll processing.
- Huntington Bank. Huntington Bank’s Lift Local Business program helps women-, minority- and veteran-owned businesses with SBA loans, business plans, and entrepreneurial education. They also promise no loan origination fees and will pay borrowers’ SBA fees.
- PNC Bank. PNC Bank is an SBA-approved lender. They also offer military members reduced direct deposit requirements to qualify for waived monthly service charges on checking accounts.
- Chase Bank. Chase Bank is an SBA-approved lender. They also waive the monthly service fee on business checking accounts and the first year’s annual fee on business lines of credit for military members.
Online business loans
Online business loans are offered by lenders that operate primarily or exclusively over the internet. Online lending platforms often provide a streamlined and efficient application process and make comparing offers from multiple lenders easy. These loans can include working capital loans or short-term business loans with repayment terms extending from several months up to several years.