Small Business Loans & Grants for Disabled Veterans

After serving in the military, many former service members find that launching a business is a natural transition. Indeed, veterans often possess the skill sets and experience that make them ideally suited for the challenges of entrepreneurship, including leadership, discipline, and the ability to perform under pressure.

But all business owners may eventually face the need for external financing, and that includes veterans. And disabled veterans who were injured in the line of duty have some additional resources to tap into, as well as more traditional forms of business financing. Read on to explore the opportunities.

Tips on Qualifying for Disabled Veteran Small Business Loans

There are many types of small business financing, including loans and grants, that you may qualify for as a disabled veteran small business owner. The U.S. Small Business Administration (SBA) Veterans Advantage Program, for instance, offers savings on fees for a variety of SBA loans.

As you explore your options, you’ll want to focus on what makes the most sense for your financing needs, looking at qualification criteria, loan amounts, rates, and repayment terms. It’s important to have a plan in place so you know how much you need and what you plan to use the money for. Then you can narrow in on the most suitable small business loans.

Recommended: Small Business Loans and Grants for Veterans

Loans Available for Disabled Veterans

There are a number of small business financing opportunities designed with veterans in mind, regardless of their disability status, as well as options for that aren’t exclusive to veterans but may appeal to them.

SBA Veterans Advantage Program

The SBA offers the Veterans Advantage Program to reduce fees associated with its popular 7(a) loan program. For 7(a) loans less than $150,000, eligible veterans (regardless of disability status) get the SBA guaranty fee waived, along with the annual service fee.

For SBA Express loans (which are less than $350,000), the program waives the guaranty fee.

Non-7(a) Express loans may also be eligible for the veteran’s program and come with a 50% reduction of the upfront guarantee fee.

Military Reservists Economic Injury Disaster Loans

The SBA also offers a Military Reservists Economic Injury Disaster Loan (MREIDL). This can be used by any eligible company that cannot meet its normal operating expenses because an essential employee is called to active duty as a reservist. While this isn’t expressly designed for disabled veterans, the MREIDL is helpful for business owners who are committed to hiring the talents of other service members who still serve in a reserve capacity.

The maximum amount for this type of veteran small business loan is $2 million and is determined by the SBA based on the actual economic injury sustained by the business.

Angel Investors

If you’re comfortable giving up equity in exchange for working capital, there are angel investors who specifically focus on veteran-owned businesses.

An angel investor is a high-net-worth, accredited investor who uses their own money to invest in a start-up with high growth potential. They typically invest very early in businesses. You can search for angel investors on LinkedIn and on sites that have a special interest in veteran-led startups such as Academy Investor Network and Vet-Biz.

Online Business Loans

You can apply for a small business loan online with any type of lender that looks like a match for your company. These online business loans are open to all business owners. Usually lending criteria include a certain amount of time in business and a minimum monthly or annual revenue. Funding is usually faster compared to other types of small business loans.

Small Business Line of Credit

A line of credit gives you access to working capital as you need it, rather than as the lump sum you’d get with a traditional business loan. It acts more like a credit card, allowing you to withdraw funds up to your credit limit. Interest accrues only on your outstanding balance.

Equipment Financing

Equipment financing is a type of funding that can help you purchase machinery and equipment. The benefit of using this as a small business loan for disabled veterans is that it uses the purchased equipment as collateral so you can minimize your responsibility for the loan. Typically, both new and used equipment is eligible for financing. Plus, you may be able to finance up to 100% of the total equipment cost, including soft costs like delivery.

Small Business Grants for Disabled Veterans

In addition to loans for disabled veterans with small businesses, you can also look for disabled veteran business grants. Here are some places to start for grants, including disabled veteran business start-up grants.

GrantWatch

You may be able to find disabled veteran business grants at GrantWatch. You can search for grants based on filters such as:

•  Interest

•  Location

•  Funding source

•  Keyword

Grants.gov

Grants.gov is a database that focuses on federal grants. You can search by keyword, eligibility, funding instrument, agency, and/or category.

Service-Disabled Veteran-Owned Small Business Program

The Service-Disabled Veteran-Owned Small Business Program through the SBA ensures that eligible businesses receive at least 3% of federal contracting dollars each year. In order to be eligible, 51% of the business must be owned by one or more service-disabled veterans.

Second Service Foundation

Another option to find disabled veteran business grants is through Second Service Foundation (formerly StreetShares Foundation), a nonprofit serving the military entrepreneurial community. The organization supports military entrepreneurs through coaching, resources, and capital, as well as a mentorship program.

Hivers and Strivers Angel Fund

Hivers and Strivers is an early-stage investment fund that focuses exclusively on providing capital to companies founded and led by U.S. military veterans. Their mission is based on the belief that veterans possess a unique set of skills—such as grit, determination, and leadership—that make them particularly successful entrepreneurs. Hivers and Strivers not only provides funding, typically ranging from $250,000 to $1 million, but also offers active support, mentorship, and access to an extensive network of experienced business leaders.

Recommended: 10 Small Business Grants for Minorities

Small Business Loans for Disabled Veterans With Bad Credit

It is possible to get a small business loan with bad credit, but you’ll probably experience some challenges. If your business has been around for more than two years, you may be more likely to get approved using your business credit rather than your personal credit score.

If either score is poor, expect to pay higher interest rates. You may also need to supply more collateral than you would if you had good credit. If possible, you might want to consider adding a cosigner to the loan to help strengthen your application.

Applying for Small Business Loans for Disabled Veterans in 6 Steps

The application process may vary depending on the lender and type of loan. Follow these steps to guide you through each decision you have to make.

1.   Create a business plan. It’s important to know how you plan to use the funds and what type of outcome you expect. A plan can capture and summarize your research on business cash management.

2.   Determine your needs. Once you know what you want to achieve, price it out so you have a specific funding request. You don’t want to get stuck with too little and not accomplish your goals. But you also don’t want to borrow (and pay for) more than you need.

3.   Research lender eligibility requirements. Find out the criteria for different loan programs you’re interested in, such as time in business and annual revenue. This way, you won’t waste time applying to lenders that aren’t a good fit.

4.   Assemble required documentation. You’ll likely need both personal and business details, including financial statements and tax returns.

5.   Compare multiple lenders. As you complete your research, narrow down your list to the top lenders that match your needs. Find out if you can get a loan quote without impacting your credit score.

6.   Choose the best loan option. Once you have rates, terms, and fees to compare, you’ll be ready to make a decision and submit your full loan application.

Tips for Improving Loan and Grant Approval Chances

To improve your chances of getting improved for either a loan or a disabled veteran business start-up grant, a small business owner should:

•  Focus on presenting a strong, well-prepared application.

•  Create a comprehensive business plan that clearly outlines your goals, market analysis, and financial projections.

•  Organize your financial documents meticulously, including tax returns, bank statements, and profit and loss statements.

•  A high personal credit score is also crucial, so work on improving it.

•  For grants, tailor your application to the specific funder’s mission and show how your business will address a community need or create jobs.

•  Demonstrate your management experience and have a solid plan for how you will use the funds to ensure success.

The Takeaway

Disabled veterans have a variety of financing resources to consider when growing a small business. In addition to taking advantage of grant programs and SBA financing discounts, you may want to consider all of your financing options.

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.

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.

With one simple search, see if you qualify and explore quotes for your business.

FAQ

What types of businesses are eligible for veteran small business loans and grants?

Eligibility for veteran business loans and grants is broad. Generally, a small business must be at least 51% owned and controlled by one or more U.S. military veterans, active duty service members, or their spouses. The business must be located in the U.S. and its territories.

Are there grants specifically for disabled veterans starting a business?

Yes, several organizations offer grants specifically for disabled veterans. These are often provided by nonprofits like Warrior Rising and The Second Service Foundation, or through government programs like the SBA’s Veteran Readiness and Employment (VR&E) program, which aids veterans with service-connected disabilities in starting businesses

How long does it take to receive funding after applying?

The timeline varies significantly depending on the type of funding and the specific program. A standard SBA loan, which is often a key option for veterans, from application to receiving funds, can take as long as six months. For grants, unlike loans, there are specific application windows, and the decision and funding process is tied to that program’s schedule. It can range from weeks to several months.

Can disabled veterans apply for both loans and grants simultaneously?

Yes, disabled veterans can apply for both loans and grants simultaneously. They are not mutually exclusive. Loans, like those from the SBA, provide capital that must be repaid. Grants, often from nonprofits or government programs like the VA’s Specially Adapted Housing grant, are non-repayable funds.

What support organizations assist with veteran business funding applications?

Key organizations that assist veterans with business funding applications include the Small Business Administration (SBA) and its Veteran Business Outreach Centers (VBOCs). Nonprofits like Warrior Rising and Bunker Labs offer mentorship, training, and sometimes grants. The Institute for Veterans and Military Families (IVMF) also provides extensive entrepreneurship programs and resources.

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Photo credit: iStock/Martinns

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