These businesses have proven to be quite successful and have generated more than one trillion dollars for the economy. However, with the help of veteran business loans, veterans can grow their companies even more. If you’re a veteran, how you apply for a small business loan is particularly important. Since veterans are provided specific federal support programs, you should consider your options carefully. In addition, how you go about choosing a loan will depend on numerous factors, such as your:
- Business history
- Credit score
- Overall financial health
Everything You Need to Know About Applying for a Veteran Business Loan:
1. Understand the Challenges that Veteran-Owned Small Businesses FaceDespite the large number of small business owners that are veterans, overall, business ownership is down for veterans. Since 2001, only 4.5 percent of service members have started their own businesses. In comparison, almost half of the veterans of World War II started their own businesses. In a report by Syracuse University, researchers concluded that access to capital was one of the biggest challenges for veteran entrepreneurs. Most veteran business owners agreed that lack of access to capital limited their ability to grow. At least part of the reason is that the current G.I. bill, unlike the previous one, doesn’t provide low-interest loans to start a veteran-owned business. Veteran-owned small businesses make up an essential part of the U.S. economy. Still, they also provide havens for returning veterans who benefit from working for someone that understands them. This makes it especially important for veterans to know their financing options.
2. How to Select a Veteran Business LoanAs a veteran, you apply for a small business loan much like anyone else. For a traditional term loan, you’ll need financial statements, a well-thought-out business plan, and business documentation. If you’re interested in applying for an SBA loan, we’ll detail those steps below.
3. Veteran Loan Options from the SBAIt’s important to note that when you receive a loan backed by the SBA, the SBA won’t be lending you the money. Instead, you borrow from a bank, financial institution, or online lender that provides SBA-backed loans. Also, remember that qualifying for an SBA-backed loan will require good credit history and strong finances. SBA loans are meant for businesses that have exhausted other finance options. Therefore, if you haven’t applied to other business entities, you likely won’t qualify for their loan programs. SBA.gov and The Office of Veterans Business Development provide an entrepreneurial training program for veterans. You can learn the basics of entrepreneurship through the program, like business financing. Plus, it includes tips on how to write a business plan. The SBA also offers the SBA Veterans Advantage, which is only available to businesses that are 51 percent or more owned by an individual who is:
- A veteran that’s an active duty service member
- Any veteran ( as long as they weren’t dishonorably discharged)
- Service-disabled veteran, reservist, or national guard member
4. How to Choose the Right Type of Veteran Business FinancingWhile it takes some time and resources, applying for a loan is usually straightforward. However, choosing a loan product that best fits your needs is trickier. Before you decide, you’ll need to consider your business needs. When it’s done right, small business financing will help you get what you need to take your business to the next level. Before taking out a loan, you should decide how to spend the money. For instance, do you need a safety net to protect your business? Are you investing in equipment to start your business? Do you want to grow your existing business? The answers to these questions will determine the type of loan that’s the best fit for you. You should also consider other types of financing, such as:
- Business credit cards
- Merchant cash advances
- Invoice factoring
- Equipment financing
- Line of credit.