How Do I Qualify For A VA Business Loan? (VA Business Loan Requirements For SBA Programs)

According to information from the Small Business Association (SBA), around 1 in 10 military service veterans are self-employed. Those veterans that run their own businesses are responsible for employing up to 6 million people nationwide. 

If you’re a military service veteran looking to start a new business or expand an existing one, there are business loans with special programs just for you. The U.S. Department of Veterans Affairs (VA) provides a range of services and assistance to former and part-time service veterans and their families. 

Veterans, as well as their widows and widowers, can be eligible for help from the VA once they have started their business. The VA has veteran’s access to loan programs offered by the SBA and works with these individuals to achieve and work on the VA business loan requirements. 

When applying for such loans, you must consider which one suits you and your needs best. Also, the requirements for receiving a VA business loan vary depending on your situation.

To help you find out more about business loans for veterans, we have information about three of the top SBA loans available for veteran-owned and/or businesses connected to military services veterans and how you can qualify for one yourself. 

How To Qualify For VA Business Loans

For a veteran to receive a VA business loan, they must meet some general business loan requirements. These include certain credit scores, the time spent running a business, and the financials of the business. 

In general, to be eligible for a VA business loan, the owners must meet at least one of the following criteria:

  • Be active-duty military service members
  • Be service-disabled veterans
  • Be honorably discharged military veterans
  • Be reservists and/or National Guard members
  • Be a widowed spouse of a service member who passed away in service or because of a service-related disability 
  • Be a current spouse of a veteran, an active duty service member, a reservist, or a National Guard member

Generally, you do not qualify for a VA small business loan if you were dishonorably discharged. But, if you fall into any of the categories set out above, you should be able to apply for a VA business loan.

However, may have to provide some form of military ID or discharge papers such as a DD form 214. This is to prove you are in fact a veteran and can back up your claims. 

For those who are service-disabled, you should ensure that you take note of your service-disabled status when applying for an SBA loan. This is because the SBA offers additional services, programs, and benefits for veterans who are service-disabled. 

VA business loans 

7 (a) Loans 

This 7 (a) loan program is the SBA’s main method of delivering financial help to small businesses. It also offers numerous variations.

When it comes to this 7 (a) loan, applicants must own a for-profit business, have a feasible business plan in motion, operate the business within the United States or U.S. territories, and have an adequate credit score. 

The standard 7 (a) loan program is available with payments of up to $5 million. SBA guarantees 85% of standard 7 (a) loans that equate to $150,000 or less. For those that are worth more than $150,000, the SBA will guarantee 75%.

The maximum amount a business can borrow with the SBA 7 (a) small loan is $350,000. As with the standard 7 (a) loan, this comes with a guarantee of 85% up to $150,000 and 75% for anything larger. 

Other options are also available such as the SBA Express program. This allows for an accelerated review of your application for loans worth $350,000 or less. The response time for these is usually within 36 hours.

However, the maximum guarantee SBA can offer for these express loans is just 50%.

Military Reservist Economic Injury Disaster Loan (MREIDL)

If a business owner or key employee is called up for active duty in the Reserves, that business may be able to apply for a Military Reservist Economic Injury Disaster Loan. This is to cover any financial obligations the business may have until that Reservist is free from active duty once again. 

The MREIDL’s main purpose is to provide working capital and cover the operating expenses of the business due to the absence of essential staff or the owner. The maximum amount loaned with the MREIDL is $2 million. 

In the case of the MREIDL, VA business loan requirements are quite strict. They include federally mandated reviews of other credit options connected to the applicant.

Before someone is approved for an MREIDL, the SBA has to determine whether the individual would be able to access credit from sources outside of the government and without any financial hardship. 

If the business is found to be able to pay for its operations through non-government means, the applicant is, therefore, not eligible for the MREIDL program. 

Microloan

If your business has lower financial requirements, the SBA can distribute funds from its Microloan program. This is done through non-profit lenders who are based in the community. 

The maximum amount with these loans is $50,000 and they are available for start-up businesses, recently set-up businesses, and growing businesses. Also, not-for-profit childcare centers can take advantage of these loans too. 

As with any loan, there are eligibility requirements. This goes for each community-based lender or Microlender Intermediary. The majority need collateral and the owner’s guarantees to acquire the loan. 

How Long Does It Take To Get A VA Business Loan?

These small business loans are notoriously difficult to apply for. A lot of time is needed to find the right lender that matches your requirements as well as acts in your best interest. 

VA loans tend to involve governmental agencies as well which involves many hurdles and piles of paperwork along the way. 

Some services can secure funds within a few days but you can expect to wait much longer to secure larger amounts of money if required. 

Leave a Comment

Your email address will not be published. Required fields are marked *