How to Get a Small Business Loan for Veterans

Those who serve represent the best of what our nation has to offer – tenacity, resilience, dedication, and the relentless pursuit of success. Yet, the transition from military to civilian life can be a challenging process. One of the key aspects of this transition is establishing a post-service career.

Some can find job opportunities in the field they worked in during their time in service while some may shift into a new career field entirely. For many, they explore the route of entrepreneurship, giving them the freedom and autonomy to run a business they can be proud of.

However, in many cases, there is one obstacle that can be difficult for entrepreneurial veterans to overcome in their journey toward business ownership: financing. The value of small business loans for veterans is paramount. Having access to adequate funding can make the difference between a veteran’s business thriving or just surviving.

From covering start-up costs, expansion, to meeting day-to-day expenses, these loans offer the financial support that veteran-owned businesses need to succeed in the competitive business world. This article aims to guide veterans through the process of securing a small business loan and what financing options may be available to them.

Understanding Small Business Loans

Small business loans are a type of financing designed specifically to meet the needs of small businesses. They offer capital to business owners to help cover various costs associated with running a business.

This could include purchasing equipment, inventory, property, or simply providing working capital. The loans are typically paid back over time, with interest, in monthly installments to the financial institution that issued the loan.

There are various types of small business loans, each with different structures, terms, and interest rates. Some are backed by the government (such as SBA loans), while others are provided by private lenders like banks, credit unions, and online lenders.

The right loan for your business depends on your individual circumstances and goals, and it’s important to explore all your options before making such a substantial financial decision.

Types of Small Business Loans for Veterans

Here are several types of small business loans that are available to veterans:

1. SBA Loans: The Small Business Administration (SBA) offers various loan programs that are popular among veterans. For instance, the SBA 7(a) program offers loans of up to $5 million, which can be used for various business purposes. The SBA also provides a Veterans Advantage program, which offers fee reductions for veterans seeking certain types of SBA loans.
2. Veteran’s Business Fund (VBF): This non-profit organization provides veterans with low-interest business loans. However, funding from the VBF must be matched on a 1:1 basis with personal or investor capital.
3. Military Reservist Economic Injury Disaster Loan (MREIDL): Provided by the SBA, this loan program offers funds to businesses that cannot meet their operating expenses because an essential employee was called-up to active duty.
4. Microloans: Microloan programs offer smaller loans – typically $50,000 or less. These loans can be perfect for start-ups or smaller businesses that need a small amount of capital.

Eligibility Criteria for Veterans

Qualifying for a small business loan as a veteran involves meeting certain requirements:

1. Veteran Status: Lenders typically require proof of service, such as your DD Form 214, which verifies the applicant’s status as a veteran.
2. Business Plan: A solid business plan is crucial. It should detail your business model, target market, marketing strategy, projected revenue, and other business fundamentals.
3. Credit Score: Your personal and business credit scores matter. They provide lenders with an indication of your reliability as a borrower. Oftentimes, your credit score will determine your interest rate, with higher credit scores garnering a lower interest rate. If you are looking to start a small business and will need financing, start building up your credit score to get better rates and financing options.
4. Financial Statements: These include both personal and business bank statements, income tax returns, balance sheets, and cash flow statements.
5. Time in Business: Some lenders require your business to have been operating for a certain amount of time, usually at least two years.
6. Revenue: Many lenders have a minimum annual revenue requirement to ensure that your business can handle the debt.

Remember, every loan and every loan provider is different. When shopping for financing options, take into consideration what will be required from you to obtain the loan. Having these items readily available can help you streamline the process as well.

How to Apply for a Small Business Loan as a Veteran

Applying for a small business loan involves several steps:

1. Gather Necessary Documents: This typically includes personal identification, proof of veteran status, business and personal financial statements, business plan, and relevant legal documents for your business.
2. Choose a Lender: Consider factors such as loan terms, interest rates, and lender reputation.
3. Complete the Application: Fill out the loan application accurately and thoroughly. Provide all required documentation. Some applications may be available online, while others may need to be completed at the lending office.
4. Wait for Approval: Once you’ve submitted the application, the lender will review your information and make a decision. If any additional documents or materials are required to complete the loan, the lender should reach out to you directly.
5. Close on the Loan: If approved, the final step involves closing the loan, which often includes signing paperwork and setting up a repayment plan.

To improve your chances of approval, consider working on improving your credit score, creating a robust business plan, and seeking advice from business counselors or mentors. If for any reason your loan application does not get approved, don’t be afraid to ask the lender why. This is important so that you make corrections and increase your chances of getting approved next time.

Alternative Sources of Capital for Veteran-Owned Businesses

While small business loans are an excellent resource, veterans have other funding options available to them:

1. Veteran-Specific Grants: Some organizations offer grants specifically for veteran-owned businesses. Like a loan, grants will typically require an application and documentation. While highly competitive, these grants do not have to be repaid and can be a great source of funding.
2. Venture Capital: Venture capitalists invest in businesses in exchange for equity. Some firms specifically invest in veteran-owned businesses, so this could be a great advantage for you.
3. Crowdfunding: Platforms like Kickstarter and GoFundMe allow businesses to raise money from the public. This option is often most suitable for product-based businesses or businesses with a compelling story. Plus, with crowdfunding, there are no interest rates, no equity given, and no repayment of funds.
4. Personal Savings or Friends and Family: Many small business owners initially fund their ventures through personal savings or by borrowing money from friends and family. Saving to start a business is a great way to practice fiscal responsibility and begin your business with no debt. However, in many cases funding start-up costs through personal savings alone is not feasible. If you have friends and family who are able and willing to support your business, borrowing from them is a unique way to avoid applications and interest rates.

WIN Home Inspection is Proud to Support Veterans In their Entrepreneurial Endeavors

An excellent opportunity for veterans looking to start a small business is joining the WIN Home Inspection franchise. WIN is the #1 ranked and fastest-growing home inspection franchise in the U.S. With a strong commitment to supporting veterans in their post-military careers, WIN Home Inspection offers a 20% discount on the initial franchise fee as a token of gratitude and appreciation for your service.

Being a proud VetFran member, WIN exemplifies its commitment to veterans with nearly 36% of its franchise owners being first responders and veterans, representing virtually every branch of the military. Moreover, WIN doesn’t stop at just helping you start your business.

We offer in-house training and certifications for 35+ essential services to ensure you have all the skills and knowledge required to thrive in your business. Additionally, WIN Home Inspection is the only franchise in the business that offers end-to-end marketing support to its franchise owners.

Take the first step toward owning a WIN franchise by filling out our interest form to learn more.

Conclusion

Transitioning from a career in the military to entrepreneurship can be a rewarding journey. Through this article, we’ve explored small business loans as a key resource for funding veteran-owned businesses. We’ve discussed understanding what small business loans are, the different types available to veterans, eligibility criteria for veterans, and how to apply for these loans.

We’ve also outlined alternative sources of capital for veteran-owned businesses. As a veteran, numerous options are available for you to fund your entrepreneurial dreams. It’s crucial to thoroughly explore these opportunities and choose the one that best aligns with your business’s specific needs and circumstances.

Embarking on a journey as a small business owner is an exciting opportunity to utilize the skills and discipline you’ve gained through your military service. Whether you choose to finance your business through a small business loan, alternative funding sources, or join a veteran-friendly franchise like WIN Home Inspection, remember, the business world values your unique perspective as a veteran. Your success story awaits – it’s time to take the first step!

With WIN, you’ll have the largest support team in the industry by your side, along with state-of-the-art technology, and the most extensive training and marketing support. To learn more, you can contact WIN at (800) 967-8127 or franchising@wini.com.