Everything You Need to Know About Best Veteran Business Loans – Forbes Advisor
Traditional financial institutions like banks and credit unions can provide loans for small businesses as well as financial products for veterans. However, eligible veteran-owned companies may raise funds from a number of other sources.
Online business loans are a common source of funding for businesses, including those owned by veterans. The loans often come with less stringent skill requirements than financing offered by traditional corporate lenders and can offer more flexible loan amounts and repayment terms. Many online lenders offer a variety of financial products in addition to standard loans and lines of credit, including equipment finance and invoice factoring.
Note, however, that these more accessible loans typically have higher annual interest rates (APRs) than their traditional counterparts. This makes them more expensive – especially for business owners who don’t qualify for the cheapest tariffs.
SBA Veterans Advantage Program
The SBA’s Veterans Advantage program reduces warranty fees on certain types of SBA 7 (a) loans given to veteran small business owners. The program was originally initiated by the Obama administration in 2014 to offer fee reductions as part of the SBA Express program and was replaced by the current savings structure when it expired in 2015. Fee relief is available under the program for small businesses that are at least 51% owned and controlled by one of the following companies:
- Honorable Dismissed Veterans
- Veterans with disabilities
- Active military service member eligible for the military’s Transition Assistance Program (TAP)
- Reservists and / or active National Guardsmen
- Current spouse of a veteran, active duty member, reservist, National Guard, or widowed spouse of a soldier who died while in service or as a result of a service disability
SBA express credit
SBA Express loans are part of the 7 (a) loan program and offer up to $ 500,000 for qualified business owners. Funds can be accessed as a line of credit or a flat-rate loan, and the SBA waives guarantee fees for companies owned and controlled by veterans, certain active military and other applicants (51% owned or more) military service and their spouses .
Up to 50% of the loan funds are guaranteed by the SBA and, although the interest rates are lender-specific, they may not exceed the maximum amount set by the SBA (5% or 6%, depending on the loan amount). Most notable, however, is the turnaround time – prospective borrowers can expect their application to be answered within 36 hours.
Disaster Loans for Military Reservists for Economic Violations
The Military Reservist Economic Injury Disaster Loan (MREIDL) program is reserved for companies that have a material employee who is a military reservist who is called to active duty. Loans are available up to $ 2 million and come with a 4% interest rate. The repayment periods are up to 30 years, with no prepayment penalties or fees.
While a MREIDL is a flexible loan option for qualified businesses, loans above $ 50,000 require collateral to secure the loan. The funds may only be used for normal and necessary business expenses – not to cover lost income or profits. In addition, MREIDL loan funds may not be used to expand business and are not available as a substitute for normal commercial debt or to refinance any other debt.