Running a business is no small feat and a healthy number of veterans have taken the leap to own and operate their own enterprise after serving their country. According to a recent report published by the United States Census Bureau , veteran-owned businesses made up about 5.9% (337,934) of all businesses, with an estimated $947.7 billion in receipts, approximately 3.9 million employees, and about $177.7 billion in annual payroll.
Even with the freedom to be in the driver’s seat, you might come across some financial challenges as a veteran entrepreneur. Growing a successful business takes more than a great product or service: keeping on top of cash flow is essential. That’s why small business owners like you deserve access to low-cost, long-term funds.
Here are some of the financing options that can help your veteran-owned business thrive.
If you’ve been in business 2+ years, have a healthy credit score and strong cash flow, the SBA’s low-cost loan programs can be your best option. SBA loans are known as the “gold standard” with low rates, long terms and very low monthly payments.
There are three types of SBA loan programs available for small business owners. The 7(a) loan program, the CDC/504 loan program and the microloan program are options available for existing businesses. The SBA doesn’t make the loans; they guarantee a portion of the funds, making SBA loans more attractive to lenders.
SBA 7(a) loans can help a business grow and save money. Here are ways you can use funds to grow your business and save.
For in-depth information about the popular SBA 7(a) loan program, review our comprehensive article: What is an SBA Loan?
SBA 7(a) loans have several advantages compared to other options including:
Read why SBA loans are so popular on the SmartBiz website here.
Lenders and loan programs have unique eligibility requirements for an SBA loan. For example, some lenders may require a business plan while others do not.
Requirements for an SBA loan facilitated by SmartBiz include:
Step 1: Check your eligibility. Before you even begin your application, make sure your business is eligible. Visit the SBA website for a list of eligible businesses. You must also meet the requirements listed above.
Step 2: Review requirements and gather paperwork. The more organized you are, the swifter the application process will move. For a list of documents required for an SBA loan, visit the SmartBiz Blog. How to Get an SBA Loan: Documents You Need
Step 3: Choose a lender. Although SmartBiz Loans is not a lender, we work with multiple banks to match you with the lender most likely to fund. You won’t waste time going from bank to bank. We’re proud to support veterans on their business journeys: 6% of the SBA loans we help facilitate are made out to majority-owned veteran small businesses compared to the national average of 4%. This video has step-by-step information about how to get an SBA loan:
For businesses majority-owned by veterans, the SBA reduces some of the costs associated with SBAExpress loans through Veterans Advantage Lending. The Express program usually comes with slightly higher rates than traditional 7(a) loans in exchange for a more expedited approval. Small business owners who are owned by a veteran or a spouse can be eligible for no upfront fees on these loans and a 50% government guarantee.
This program was created to give small businesses low cost funds for expansion or modernization. Typically, up to 50% of project costs are funded by a lender backed by the SBA. CDCs (Community Development Corporations) usually fund up to 40% of the project cost. The final 10% is a cash down payment expected to come from the small business owner.
A 504 SBA loan might be a good fit for small business owners interested in purchasing a commercial real estate property. To find your local CDC, visit the SBA website here.
The Microloan Program is for very small businesses and provides loans of up to $50,000. Requirements to qualify for a microloan can vary depending on the lender. Proceeds from an SBA Microloan can be used for most business expenses but not for paying down debt or real estate purchases.
Low-cost SBA loans have some of the lowest interest rates and lowest monthly payments available. However, not every business owner initially qualifies and some businesses need funds more quickly than the SBA application process can provide.
SmartBiz Loans worked with our bank partners to offer clients the next best loan option – a bank term loan. Because SmartBiz has multiple banks on its platform, customers are matched with the bank most likely to fund. This drives up approval ratings and business owners won’t waste time going from bank to bank.
Non-SBA loans are term loans meant to be repaid in a shorter amount of time than the 10-year term of a typical SBA loan. This type of loan can be a great way to get the funds you need to grow or maintain your business until you are ready for an SBA loan.
SmartBiz currently offers non-SBA loans through its bank partners. Here are the details:
Ready to apply for an SBA loan? Discover if you’re prequalified in minutes without impacting your credit score here.
If you’re not quite ready for an SBA loan, our loan experts will help you explore other options.