How to Find Business Loans for Veterans

What is a VA small business loan?

If you’re a former service member looking to become your own boss, you’ll likely need some business funding. Although you can always attempt to get a bank loan for your small business, your status as a veteran affords you access to special business funding options from the SBA, commonly known as VA small business loans.

Despite the name, VA small business loans are not related to the Department of Veterans Affairs. Instead, this program is handled by the SBA’s Office of Veterans Business Development. It offers several options for “veterans, service-disabled veterans, reservists, active-duty service members, transitioning service members, and their dependents or survivors.”

According to the SBA, approximately $1.1 billion in support was approved for more than 2,800 veterans in fiscal year 2023 — 14 percent higher than in 2022.

Like other loans, VA small business loans are provided by a bank or other lending partner and still require regular repayment with interest. The difference between a standard business loan and an SBA-guaranteed loan is that the government agency works directly with lenders to set guidelines that reduce their risk. A lowered risk for lenders typically translates to lower interest rates and longer terms for the borrower, although the exact details depend on the loan type and the borrower’s unique financial situation.

What types of VA small business loans are available?

Military veterans who are looking for a small business loan have many options. Thanks to the SBA’s various small business lending programs, veterans can access funds backed by the administration just as millions of their fellow citizens do.

Although the SBA has offered veteran-specific lending programs over the years, including the Patriot Express loan, those options have expired. The administration no longer offers business loans with reduced rates for veterans. Still, when it comes to small business loans for veterans, the following SBA loans are the most common and fit many entrepreneurial situations.

Standard 7(a) loans

Arguably the SBA’s bread-and-butter lending effort, the 7(a) SBA loan program covers a wide range of small business needs. With a maximum amount of $5 million, this SBA loan aims to help established small businesses instead of burgeoning entrepreneurs; it’s usually used for things such as working capital and commercial real estate. 

Because these loans are backed by the SBA, they generally have lower interest rates and monthly payments over a longer period. The SBA guarantees up to 85 percent of a loan amount of less than $150,000 and 75 percent of loans worth more than that.

There used to be an SBA 7(a) program tailored to veterans known as the SBA Veterans Advantage program. This program waived or reduced fees for loans up to $125,000 or provided up to 50 percent in discounts for loans worth more than $125,000. However, the SBA no longer offers such benefits. The last reference of such a program at the SBA was in 2018, and there are no signs that the program will be revived.

Military Reservist Economic Injury Disaster Loan (MREIDL)

If you were a small business owner when you were called into active duty, you may be entitled to assistance from the Military Reservist Economic Injury Disaster Loan program. This business loan program provides financial assistance if an essential worker or business owner must return to active duty. The funding provides additional cash flow until that person returns from their tour of duty.

Beneficiaries can obtain a loan of up to $2 million with a fixed 4 percent interest rate and a maximum repayment term of 30 years. The SBA requires business collateral for loans over $50,000. Though it “will not decline a loan for lack of collateral,” the SBA says it will require you to “pledge collateral that is available.”

Microloans

In addition to its more traditional loan programs, the SBA provides microloans — a form of microfinancing — to small businesses that can’t typically qualify for other lending options. As the name suggests, microloans offer smaller amounts, up to $50,000. Although the maximum loan amount is tiny compared with those offered by other small business loan programs, microloans often have higher interest rates of 8 to 13 percent. 

Who qualifies for a VA business loan?

Numerous types of small business loans are available to veterans, and the requirements vary by the type of loan, the applicant’s personal credit score and other factors. In general, however, these are the SBA’s eligibility requirements for the 7(a) loan program:

• Your business must operate for profit.
• You are engaged in or propose to do business in the U.S. or its territories.
• Your business has an owner with invested equity.
• You have exhausted alternative financial resources, including personal assets, before seeking financial assistance.

For a closer look into which loans might best fit your small business, consult the SBA’s free Lender Match tool.

The best business loan providers for veterans

Among our picks for the best business loans, we recommend these providers for veteran borrowers:

• SBG Funding: Unlike most SBA 7(a) loan providers, SBG Funding offers a maximum of $10 million. Your repayment term will range from two to 10 years. Your interest rate will be the prime rate, which the Federal Reserve sets, plus 2.5 percent. Our SBG Funding review explains more about this small business lender.
• Rapid Finance: With this lender, your SBA 7(a) loan maximum may be up to $5.5 million. Your loan term will range from one to 30 years. You may pay interest or a fixed fee and other charges. Read our Rapid Finance review to explore all of the financing options available through this lender.

What other business financing options are available for veteran small business owners?

If the aforementioned business loan programs don’t match your needs as a veteran business owner, you can explore numerous other programs.

Service-Disabled Veteran-Owned Small Business program

Over the years, thousands of men and women have returned from conflict with various disabilities sustained in battle. To help those individuals return to civilian life and earn a living, the Service-Disabled Veteran-Owned Small Business program works to award at least 3 percent of all federal contract spending to such entrepreneurs annually. Through the program, contractors can compete for specially set-aside contracts every year.

You must meet these criteria to qualify for the program:

• You must be a veteran with a disability sustained during service.
• The funding must be for a small business.
• The business must be at least 51 percent owned and controlled by one or more service-disabled veterans.
• One or more service-disabled veterans must manage the business’s daily operations.

Hivers & Strivers

Business loans and government contracts aren’t the only way to get funding as a veteran entrepreneur. If you’re looking for an investor to get your venture off the ground, Hivers & Strivers may be a worthwhile solution. This group was founded by graduates of U.S. military academies, and most of its investors are veterans themselves. It provides support at the early stage of a business’s existence, with many investment rounds ranging from $100,000 to $1 million.

Warrior Rising

Another veteran-founded source of business funding, Warrior Rising, has financially supported over 26,000 veterans to date. In fact, 21 of the businesses it has helped to fund are valued at over $1 million. 

Step five of Warrior Rising’s highly hands-on process gives you access to grants. Although the company is more of a startup incubator for veterans than a traditional funding source, its grant opportunities merit its inclusion on this list.

National and regional resources for veteran-owned businesses

National and regional resources are available to veterans who plan to open a business. After establishing the business, the owner can continue using the resources to maintain operations and seek assistance from organizations that provide support to veterans. These are some resources you might want to consider as a veteran business owner:

National Veteran-Owned Business Association

Numerous nonprofit organizations nationwide work with veterans who own a business. Research each organization to determine the membership benefits and costs. One example is the National Veteran-Owned Business Association, a national nonprofit that certifies that each business is owned and operated by a veteran of the armed forces. The organization can help with networking by hosting events for veteran business owners.

Regional business associations

Similar to national associations, regional business support groups are categorized as nonprofits. The regional associations near your business location can connect you with other local business owners with veteran status. Regional and national organizations also commonly release publications to alert members to business news that could affect veterans.

Veterans Business Outreach Centers

Veterans Business Outreach Centers are available through the SBA. The centers provide pre-business seminars to help with planning a new business. Staff can also help you create a business plan and provide a feasibility assessment of a business concept. Mentorship and entrepreneurial counseling are available on-site.

American Corporate Partners

American Corporate Partners could be another invaluable resource for veterans who are starting or currently own businesses. The organization provides mentorship and useful services for those who are making the transition from the military to private business.

Entrepreneurship boot camps

An entrepreneurship boot camp is an intense program to help veterans launch a business and set themselves up for success right out of the gate. Boot camps are usually short-term learning seminars that pack a lot of business knowledge into each meeting. Seek out virtual and in-person boot camps to get started.

Veterans can easily get excellent loans

Many of the best loans available to the average business owner are also available to veterans — but with more favorable terms, rates and repayment periods. As a veteran, you also have access to business support resources that are not available to other entrepreneurs. Use your veteran status to get financial (and other) help that isn’t always within reach for others, and you’ll open powerful doors for your future.

Max Freedman contributed to this article.