Running a small business is no easy task. If you’ve served your country and own a small business – or want to start one – you may need some financial help along the way. Although VA small business loans are no longer available, there are other options for veterans looking for small business loans.
What Were VA Business Loans?
Until 2018, the Small Business Administration (SBA) had reduced fees for veterans loans through the Veterans Advantage program. SBA loans for veterans worked the same way as regular SBA loans – private lenders provided the loans, and part of the loans were guaranteed by the federal government. Then the money could be used to start a business, pay for operating expenses, buy equipment or real estate, or pay off higher-interest debt.
The reduced fees for VA business loans expired in 2019. While veterans are still eligible to apply for SBA 7 (a) loans, they pay the same fees as all other applicants.
Small business loans for veterans
While the Veterans Advantage program is no longer an option, veterans looking for small business loans still have a few options. You’ll want to check out the specific terms of the program you’re interested in, but for most programs, a veteran-owned business is defined as majority owned by one of the following:
- Honorably released veterans.
- Disabled veterans.
- Active duty personnel eligible for the Army’s Transition Assistance Program (TAP).
- Active members of the National Guard and reservists.
- Current spouses of any of the above.
- Widowed spouses of veterans who died in service or from a service-related disability.
SBA Loans 7 (a)
Although the Veterans Advantage program that reduced or eliminated fees on SBA 7 (a) loans for veterans has been discontinued, veterans are still eligible to apply. SBA Loans 7 (a). The loans are good for funding of up to $ 5 million. Businesses should be for profit and should not be past due on their debts to the US government.
SBA Express Loans
SBA Express loans share many similarities with SBA 7 (a) loans under the now discontinued Veterans Advantage program. With an SBA Express loan, the approval process takes a maximum of 36 hours. It will take longer than that to get your money back, but knowing if you are approved or not can be helpful.
SBA Express loans are capped at $ 350,000, but veterans currently pay no origination fees on SBA Express loans. Another thing to keep in mind is that SBA Express loans generally carry higher interest rates than 7 (a) loans because the government guarantees less of the loan amount.
Economic Disaster Loan for Military Reservists (MREIDL)
The SBAs Military Reservist Economic Disaster Loan Program (MREIDL) provides low-interest commercial loans when a “core employee” is called up for active duty in the Reserve or National Guard. The loan provides up to $ 2 million to help business owners cover operating expenses they might have paid had the employee not been called.
Other small business loan options for veterans
There are a variety of other small business loan options for veterans. Navy Federal Credit Union offers programs for small businesses, and many states have programs that help small businesses owned by veterans and others get working capital.
Other benefits for seasoned business owners
While the SBA no longer offers VA small business loans, it does offer mentoring programs for veterans, including courses on military bases, online programs for female veterans, and training on how to apply for government contracts. The SBA also offers veteran entrepreneurship training programs to help veterans start and run their own businesses.
Frequently Asked Questions About Small Business Loans For Veterans
Can I Get a Small Business Loan With Bad Credit?
Even if you are unlikely to receive the best interest rates, it is still possible to get a small business loan with bad credit. Before choosing the best credit for your small business, be sure to compare loan terms, interest rates, and fees.
Can I get a VA (Veterans Advantage) SBA business loan?
The Veterans Advantage Small Business Loans are no longer available. However, small business owners have several financing options, including an SBA 7 (a) loan, SBA Express loan, and Military Reservist Economic Disaster Loan (MREIDL).
Does the VA offer business loans?
The Department of Veterans Affairs does not provide business loans. Instead, the VA website urges veterans to check out the SBA’s offerings.
The bottom line
VA loans in the traditional sense ended in 2019. However, there are still several options for veterans to obtain small business loans. For some, SBA Express or MREIDL may be the best option. Other seasoned business owners may prefer to obtain their small business loans through their local credit unions, online or peer-to-peer lenders, or government programs. For others, a personal loan, home equity loan, or home equity line of credit (HELOC) may be the best option.