SBA Loan Programs for Veterans – Do You Qualify?

The veterans who return to the workforce each year do so with a host of valuable skills. Their time in the military has certainly taught them well, as such veterans make some of the best entrepreneurs. Studies and surveys have revealed that vets all the way from WWII to the current time have shown incredible interest in starting their own businesses.

 

In accommodating those veterans who do wish to launch their own business, the SBA has created a number of programs all geared toward helping returning soldiers see their entrepreneurial dreams come true. It can be difficult transitioning from the realm of military life to that of civilian, and particularly if you are interested in owning and operating your own company, there could be potential hurdles which you must overcome—the financial obstacles among the biggest. This is why the US Dept. of Veteran’s Affairs and the SBA are working together to help veterans get those loans necessary to begin a new business venture. Even if your credit score isn’t exactly where you’d like it to be, you still have options as far as these programs go. Keep reading to find out more!

 

Understanding SBA Loans

The Small Business Association isn’t the actual bank from which you get money; rather, they secure the money that a lender would extend to you. This greatly diminishes the bank’s risk and make you as a candidate a safer bet.

Plus, because the money is guaranteed, the banks are apt to offer more attractive interest rates and other such benefits. And if otherwise, you might not qualify for a loan, the backing of the SBA again, helps better your odds.

 

Veteran Loan Programs Available Through the SBA

The SBA loans in question are basically similar to VA loans except geared toward small business activity. And as they are designed specifically for vets, there are provisions which help make them more accessible. To qualify you must be a military veteran or a spouse. You will have to prove your status upon applying.

Beyond just the financing aspect of it, these loan programs also come with counseling services as well as access to other such business resources. There are three primary types of loans:

  • The SBA Patriot Express Loan Program
  • The SBA Veterans Advantage Loan Program
  • The Military Reservist Economic Injury Disaster Loan (MREIDL) Program

 

The SBA Patriot Express Loan Program

This particular loan program began back in 2007. It helped more veterans access needed money, not to mention, helped speed up the overall process. Technically this stopped in 2013, but monies are still available for veterans through the SBA Express Loan Program.

With the SBA Express program, veterans have the ability to borrow up to 350k. As far as the SBA’s end of things, they guarantee 50% of the amount borrowed. You can apply for these loans for a variety of business-oriented reasons (not merely to start your own company). For instance, you can expand your current business, buy new equipment, or even just get working capital that may be needed. The interest rates on these express loans are negotiable; they tend to fall somewhere between 7.25 and 10.25 percent.

 

The SBA Veterans Advantage Loan Program

The SBA’s 7(a) Loan Program is both a veteran and nonveteran based program. With this there is generally a 3% upfront fee; however, if you’re a vet and qualify for the Veterans Advantage, the fee is waived for those loans over 150k. The maximum amount allowed under this program is 350k. With the Veterans Advantage program, the following groups are eligible to apply:

  • Veterans
  • Veterans disabled in service
  • Active-duty service members participating in the Transition Assistance Program
  • Current spouses of military community members
  • Widowed spouses of a veteran who died during service or of a related disability

 

In going to apply for this loan, you will most likely be asked to provide the following types of documentation:

  • Copy of DD Form 214 which shows your status as a veteran
  • That which shows your service-disabled status
  • DD Form 2, an Armed Forces Identification Card, DD Form 2648 or DD Form 2648-1
  • If you are a National Guard Member: DD Form 2 or an Armed Forces Identification Card
  • Evidence of spousal status
  • If you are a widowed spouse: documentation from the Department of Defense or from the Department of Veterans Affairs

 

The Military Reservist Economic Injury Disaster Loan (MREIDL) Program

If one of your central employees is in fact called for service, this, of course, can be a great hindrance to your business operations. Thus, the Military Reservist Economic Injury Disaster Loan (MREIDL) is a program designed to help your company continue to run smoothly even if you have an employee called away.

They are not profit-centered loans, but rather utilized for working capital. They are available to those businesses owned both by veterans and also non-veterans. You can borrow up to two million with this particular program. The interest rates tend to fall right around 4%. Keep in mind, these are taxpayer subsidized.

 

So What is the Best Small Business VA Loan for You?

This is just a short overview of what the SBA and VA have available for veterans looking to start a business or potentially expand their current business. You need to do your homework to determine what might be the best choice for you. Navigating the world of business financing can be tough—veteran or not. One thing you want to be sure of is not to bite off more than you can chew; meaning, make sure you have the capacity to repay the loan. The last thing you want to happen is for your company to default—this can spell disaster.

 

Speaking to a loan officer or even SBA representative can help you gain a clearer understanding of what is involved in the loan process; from what type of collateral you might need, to the other factors that go into evaluating an applicant, they can help steer you in the right direction. At First Union, we are certainly here to help. If you are seeking a veteran based loan, call today and let’s get you started on the right foot!

 

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Are you ready for greatness? First Union Lending is here to help you achieve your financial goals.

Let’s do this together!

Are you ready for greatness? First Union Lending is here to help you achieve your financial goals.

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