Trying to start your own business can be a challenge for anyone - but even more so for veterans. The good news is that there is a range of loans and even grants available to help you get started with your business.
In fact, veteran-owned businesses make up a good chunk of the American economy. Did you know that veteran-owned businesses employ around 5.8 million people? Around 45% more veterans than non-veterans are also more likely to be self-employed, and employ other people.
So it’s only natural that as a veteran you will need a VA business loan to use as a starting point for your business or to give your business the boost it needs.
Which may of course lead you to think about how much is the VA business loan? How much can you apply for? And how hard is it to get a VA business loan, anyway?
How much is the VA business loan?
It’s important to remember that the Veterans Administration (VA) doesn’t actually offer a business loan themselves. These loans are partially guaranteed by the Small Business Administration (SBA), which are then offered to you by a bank or other financial institution such as a credit union.
So there will be no one size fits all amount when it comes to how much money you can borrow.
The amount of money you can borrow will depend on the loan in question and what you qualify for, however, programs such as the Military Reservist Economic Injury Disaster Loan Program (MREIDL) can provide loans of up to $2 million.
The SBA Standard 7(a) loan program is one of the more popular options for veterans, and can guarantee up to $5 million. A fee may be required to guarantee the loan, and this particular loan is designed for already existing businesses rather than as a start-up.
There’s also the SBA Express Loan, which is just an expedited application process for veterans for the SBA 7(A) loan up to $350,000.
This particular loan has a quick turnaround with the application process and will guarantee up to 50% of the loan. Around 60% of all SBA 7(a) loans are SBA Express Loans.
The amount of money you can borrow will also depend on factors such as the business you want to start, your credit score, and many others. Veterans can often be offered preferential rates, however, this will depend on the loan you apply for.
There’s unfortunately no guarantee that you’ll get the loan you’re after just because you’re a veteran, so you should research thoroughly before you apply to find the loan that best meets your needs and the needs of your business.
How do I qualify for a VA business loan?
The requirements for a VA business loan will depend on the loan that you’re applying for. Speaking in general terms, you will need to meet one of these criteria to qualify for VA small business loans:
- Active-duty military service member that’s eligible for the Transition Assistance Program (TAP)
- Active reservists and/or National Guard members
- Current spouse of any veteran, active duty service member, reservist, National Guard member, or the widowed spouse of a service member who died as a result of a service-connected disability or while in service
- Honorably discharged veterans
- Service-disabled veterans
The business will need to be at least 51% owned by one of the above in order to qualify for the loan.
Those veterans who were dishonorably discharged won’t be eligible for VA business loan programs. Businesses that are gambling businesses, lending businesses, or pyramid schemes won’t qualify for these loans either.
You may also need to think about your credit score.
How hard is it to get a VA business loan?
As long as you qualify for the veteran business loan that you’re applying for, you shouldn’t have too much trouble securing it. However, there may be other factors to consider. Some lenders may require you to have a certain credit score before you can qualify for the loan you want.
In order to qualify for a veteran SBA loan, you will need to have a FICO score of around 685 or higher. Not all hope is lost if you have a lower score. There are ways that you can boost this score so that you’re more likely to be accepted for a VA business loan.
There may also be some lenders who won’t require a credit score for you to qualify for a business loan, such as National Business Capital.
Some lenders will also require you to have a business plan in place. You may find it more of a challenge to secure funding for a new business if you don’t have a great credit score, but it will differ between lenders.
Other factors for a business loan may require you to provide an in depth financial background of your business to show that you can repay the loan.
Are there grants for veterans to start a business?
If you’re a veteran looking to start a business, you may need a helping hand to do so. Loans are a great way to get started, but this is money that you borrow and then have to repay with interest.
A grant is money that you don’t have to pay back. However, depending on the grant you want to apply for, there may be some conditions that you need to meet first.
In order to qualify for non-profit organizations, government, or federal grants, you will have to be either a service-disabled veteran, an active member of the military taking part in the TAP, an honorably discharged veteran, or the spouse of any of these.
As long as you meet these criteria, you should be able to qualify for a grant.
There are several places you can then research and apply for a grant, but here are a few to get you started.
US Department of Veterans Affairs
The US Department of Veterans Affairs offers a VA Small Business Grant to help and support military veterans who want to start their own business.
You will need to be able to meet the criteria before you apply, so it’s important to check what’s required. You should read the guidelines carefully to ensure that you’re applying for the right grant that meets your needs.
Another grant to consider is the Vocational Readiness and Employment (VR&E) Program for Disabled Vets. This is another grant that’s overseen by the US Department of Veterans Affairs. The amount of funding that you’re able to access will depend on the severity of your disability.
You will also need to submit a business plan before you can secure funding. Even if you don’t qualify for funding, you could also access career support, counseling, job training, skills coaching, and resume writing through the VR&E program.
This particular grant isn’t specifically aimed at veterans, however, there are loads of military-owned businesses that benefit from SBIR grants. This makes it worth investigating to see if it will suit your needs.
The only caveat is that your business must focus on scientific research to qualify for funding. You will also need to prove that your business has commercial potential.
National Association for the Self-Employed (NASE)
If you need no more than $4,000 to get your business started, this might be the grant for you. Growth Grants are offered via NASE to all qualifying entrepreneurs - including veterans.
You will need to become a member of the NASE to qualify and include a business plan with your application.
Another handy resource is the GrantWatch website. This allows you to search for all available loans, including those for veterans. If you can’t get one of the above loans, this may be your next place to check to see if there are other grants available that meet your needs.
So there you have it! The amount of money you can borrow for a VA business loan will differ depending on your circumstances, the loan you’re applying for, and the business you want to start or support.
If you can’t get a loan, it may be worth investigating whether you apply for a veteran grant to help you instead.
As long as you’re a vet who meets certain requirements, you shouldn’t have any issues securing a loan for your business. You should also now have more of an idea of where you can get started so that your business can flourish!