Small Business Loans and Grants for Veterans

By Nancy Bilyeau. May 22, 2024 · 8 minute read

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Small Business Loans and Grants for Veterans

As a veteran with a small business, you need funding. This may include startup financing or money to purchase property, buy inventory, or pay employees, among other needs.

Not only are there business loans to know about but also grants, government funding, and private business options. These funding sources could make a big difference to a veteran-owned business. Read on to learn what’s out there.

4 Types of Small Business Loans for Veterans

The Small Business Administration (SBA) offers programs to support veterans, including small business loans specifically for veterans with disabilities, reservists, active-duty service members, people transitioning out of service, and dependents or survivors.

To learn details about the educational programs, funding options, and counseling available to veterans, you can . contact your local Veterans Business Outreach Center (VBOC).

Here are four loan programs aimed at veterans.

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1. SBA 7(a) Loan

What is it?

These are government-backed loans of up to $5 million that can be used for almost any business-related costs, including purchasing commercial real estate.

Why choose it?

If you need more capital, the SBA 7(a) loan program gives you access to funds you can use toward a variety of business expenses. Because these loans are backed by the government, SBA loans tend to have favorable terms and rates.

Borrowers who qualify for the Veterans Advantage program can also take advantage of reduced fees.The fee reduction can be applied to the SBA 7(a) loan.

Keep in mind

Application turnaround time is 5 to 10 business days. If you need a relatively small amount of capital in a shorter period of time, consider an SBA Express Loan.

SBA loans can be competitive. Lenders usually require borrowers to have strong credit, an established business, and some form of collateral to offer.

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2. SBA Express Loan

What is it?

These small business loans are backed by the SBA and offered by banks, credit unions, and other approved lenders. SBA Express Loans come with an application review time of 36 hours and offer a maximum loan amount of $350,000.

Why choose it?

The SBA Express loans can help those in need of immediate funding.

Keep in mind

There are differences to consider between the standard 7(a) loans and Express Loans. For example:

The maximum amount you can borrow:

•  Standard: $5 million

•  Express: $350,000

The maximum amount guaranteed by the SBA:

•  Standard: 85% for loans up to $150,000; 75% for loans greater than $150,000

•  Express: 50% for all loan amounts

The duration of revolving lines of credit (excluding extensions):

•  Standard: Up to 10 years

•  Express: Up to 7 years

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3. Military Reservist Economic Injury Disaster Loan (MREIDL)

What is it?

The MREIDL loan program is offered to small businesses with an essential employee who is “called up” to active duty due to his or her position as a military reservist. These loans provide working capital to cover necessary business payments until the essential employee returns from active military duty.

You cannot use an MREIDL loan to:

•  Cover lost income or profit

•  Expand your business

•  Refinance long-term debt

•  Replace typical commercial debt

Why choose it?

If you or a vital employee is on active duty in the military, the MREIDL may help support your business. The funds may help prevent losses that would be incurred in the absence of essential employees by offering loans to cover your business’s necessary obligations.

Keep in mind

If your small business can access capital from non-government sources or you’re able to fund your own recovery, you should pursue that option first, as in those cases you will not be eligible for a MREIDL loan. Additionally, MREIDL loans over $50,000 require real estate as collateral.

4. Non-Government Small Business Loans for Veterans

If you’re having trouble qualifying for a government-backed small business loan, there are still a number of lending options. A few to consider include:

•  Loan from an online lender: These lenders tend to have less stringent qualification requirements than physical banks. However, their interest rates may be higher and borrowing amounts could trend lower.

•  Business line of credit: It’s similar to a personal credit card, with a credit limit and interest accrual only on the expenses you have not repaid. Banks and online lenders both offer business lines of credit.

•  Peer-to-peer network: This type of funding matches borrowers with independent investors. Because it doesn’t involve borrowing from a bank or an online lender, a peer-to-peer network may be a good option when it comes to small business loans for veterans with either brand-new businesses or credit that needs work.

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Applying for Veterans Advantage

If you plan on applying for an SBA 7(a) or Express loan, it’s a good idea to review the Veterans Advantage eligibility requirements to see if you qualify.

SBA Veterans Advantage: Eligibility Requirements

To apply, you and your business must meet the eligibility requirements outlined below.

The business needs to be 51% or more veteran-owned. This includes owners who are:

•  Active duty

•  Service-disabled

•  Reservists and/or active National Guard members

•  A spouse of a service member

Small Business Support for Veterans with Disabilities

To further support veterans, the SBA offers the Service-Disabled Veteran-Owned Small-Business Program, which allows eligible veteran-owned small businesses to compete for contracts set aside specifically for disabled veterans.

Eligibility requirements:

•  The company must operate as a small business.

•  The business must be owned and controlled by one or more service-disabled veterans, at a minimum of 51%.

•  One or more service-disabled veterans must be responsible for managing operations and making long-term decisions.

•  Eligible veterans must have a disability connected to their past service.

For additional information on business contracts for veterans, visit the Office of Veterans Business Development.

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How to Get a Small Business Grant for Veterans

Unlike a loan, a grant doesn’t have to be paid back. It is essentially debt-free financing that allows you to have the capital you need to start or grow a business.

Almost any business can apply for a grant, but there are some specifically geared toward veteran-run businesses. Given the amount of competition the average federal grant inspires, you may have more of a fighting chance of getting one if the pool is limited to only veteran business owners.

Grants provide capital that can be used for many purposes, from covering startup costs to allowing you to hire employees. You could use the funds to buy equipment or technology that helps you work more productively—it all depends on the grant itself.

Grants to Help Vets Start a Business or Expand One

There are many government small business grants available to veterans. It’s just a matter of knowing where to look in order to find the right one for you and your business. Here are some resources to get a start on your search.

Grants.gov

Grants.gov is a large database of all the federal grants available to anyone, including veterans. You can search by agency, category, or eligibility. Each grant has different eligibility requirements, and only certain types of organizations may apply. It’s important to read those requirements carefully to make sure you qualify.

GrantWatch

Another database to spend some time on is GrantWatch. Here, you can find grants from federal, state, and local government agencies, as well as foundations and corporations in each state.

Your State’s Veteran Business Outreach Center

Most states have web portals with resources for veterans living in that state. For example, California has CalVet, which lists resources for veterans and service-disabled vets, which may include self-employment grants for service-disabled veterans. You can also find local Veteran Business Outreach Centers (VBOCs) by zipcode here.

How to Get a Small Business Grant for Veterans

There are small business grants for veterans in a variety of situations, from disabled vets to those starting a brand new business. Requirements will vary, but most require you to be a veteran, reserve, or transitioning active duty member of any branch of the U.S. military. Some grants are also open to spouses or children of military members.

Reviewing Requirements

To apply, first review the eligibility requirements. Pay attention as well to deadlines so you don’t waste time filling out paperwork for a grant that’s already closed its window for applications.

Putting Together Your Proposal

Gather the required paperwork, which might include a business plan, key financial statements, and mission statement. Next, allot plenty of time to write your grant proposal and/or fill out the application. You may be asked how your business started or what you plan to do with the funds. Answer honestly, but don’t be shy about singing your company’s praise. This is your opportunity to display what is unique about your business.

Reviewing and Polishing

Finally, carefully review your application and make sure you include everything required. Proofread your proposal, maybe asking a colleague to provide a second set of eyes. You want your application to be as flawless and engaging as possible.

You may also consider hiring a grant writer. This is someone who fills out grant applications for a living. They will likely be more familiar with the process and what reviewers are looking for in an application.

If you’re seeking financing for your business, SoFi is here to support you. On SoFi’s marketplace, you can shop and compare financing options for your business in minutes.


Large or small, grow your business with financing that’s a fit for you. Search business financing quotes today.

FAQ

Does the VA offer business loans for military veterans?

No, the Veterans Administration does not provide loans for businesses. The Small Business Administration (SBA) has a special loan program for veterans. Veterans can borrow up to $500,000 through the SBA’s Express loan program.

Is it easier or harder for veterans to get business loans?

There is no special barrier for veterans to overcome and actually there are programs targeting them through the SBA. However, ultimately they will need to present the same creditworthiness and financial profile as any other successful loan applicant to secure funds.

Can you use your GI Bill to start a business?

This is something that many veteran groups and legislators support: expanding GI Bill benefits to assist entrepreneurial veterans in obtaining access to small business capital. It is not yet in place but may be possible within the next few years.


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