People all over the country struggle to lock down small business loans every single day, but it can be particularly difficult for those who have served in the military. Many veterans who come out of service want to put their skills to the test in a new arena with a new business. Per the 2012 US census, over 2.52 million businesses in the country are majority-owned by veterans, proving that there are avenues for veterans to receive funding for their businesses.
Following years of service, veterans can struggle to receive a small business loan through traditional means, which is why specialised veteran small business loan programs have been established. These programs allow for a less restricted and easier way for veterans to get a small business loan.
While each company that offers these veteran small business loans will have slightly different regulations and criteria, we’re going to break down the core needs for eligibility as well as the many types of veteran loans available.
Are you eligible for a veteran small business loan?
As mentioned, lenders will have slightly different requirements when looking at funding a veteran-owned business, so it is always worth looking on websites and inside pamphlets to see exactly what the service needs to see on an application form.
However, if there’s one criterion that runs true for the vast majority of lenders, it’s that the business must be majority-owned (at least 51 percent) by a veteran. The term ‘veteran’ also has a specific list of criteria for what qualifies someone for veteran small business loans. Most of the time, any of the six following types of veteran will qualify for funding:
As is the case with any loan applicant, veterans who seek a veteran small business loan will have a lot of paperwork to assemble and deliver.
On top of the regular loan application documents, veterans, spouses, and service-disabled veterans need a copy of their Form DD 214. Those in the Transition Assistance Program need to have their DD Form 2 as well as their DD Form 2648 or DD Form 2648-1. National Guard members and reservists will need their DD Form 2 while their spouses and spouses of transitioning members will need to show their DD Form 1173. Widows require evidence of their spouse’s death in the line of duty or from injuries sustained while serving in the form of documentation from the Department of Veteran Affairs or the Department of Defense.
Veteran small business loan programs
Establishing if you qualify for a veteran small business loan is half of the battle. Next comes finding the right program for you. Many companies set up different veteran schemes to appeal to the many types of businesses that veterans may be looking to start or continue as well as the different types of veterans looking to apply.
Many veteran-oriented programs are based on the original offering from the companies, but with special perks to help veterans. For example, the 7-Eleven Veterans Franchising is one of many company offerings that includes special benefits to veteran-owned franchises such as up to 65 percent franchising, special financing options, and up to 20 percent off the initial franchise fee.
The Veterans Business Fund takes a different approach from the more recognized lenders, such as banks, as it relies on people to donate in order for them to provide funding. It backs veterans who need funding to get a franchise business or open a small business. They are a nonprofit organization which seeks to offer veterans small business loans on favorable terms but not as the sole finance for the business – an outside financial institution is needed alongside the Veterans Business Fund financing to gain the resources on offer.
Military Reservist Economic Injury Disaster Loans have also proven to be a useful resource for many, but they are not for all types of veteran. These loans are specifically tailored to veteran reservists and current reservists whose small businesses suffered due to them being called into duty. The business afflicted due to the person being called into active duty also has to be deemed incapable of recovery without government intervention for this financing to be granted.
One of the most popular in the field, however, is StreetShares. The non-government resource is owned and run by veterans and seeks out veterans business to grant loans. The website offers an original take on the getting funded dilemma as it connects entrepreneurs with potential investors interested in financing small businesses via their online auction platform.
There are many offers and programs created specifically to help veterans start up small businesses in the United States of America. Once you’ve established which category of veteran you fall under, you can then identify the financing program which suits your needs the best.