Running a small business is no easy feat. If you have served your country and own a small business — or want to start one — you may need financial help along the way. While VA small-business loans are no longer available, there are other options for small-business loans for veterans.
What were VA business loans?
Through 2018, the Small Business Administration (SBA) had reduced fees for veteran business loans through the Veterans Advantage program. SBA loans for veterans worked the same way as regular SBA loans — private lenders made the loans, and a portion of the loans were guaranteed by the federal government. Then the money could be used to start a business, pay operating expenses, buy equipment or real estate or pay down higher-interest debt.
The reduced fees for VA business loans expired in 2019, and 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 the specific terms of the program that you’re interested in, but for most programs, a veteran-owned business is defined as majority owned by one of the following:
Honorably discharged veterans.
Active-duty personnel who are eligible for the military’s Transition Assistance Program (TAP).
Active National Guard members and reservists.
Current spouses of any of the above.
Widowed spouses of veterans who died in service or of a service-connected disability.
SBA 7(a) Loans
While 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 for an SBA 7(a) loan. These loans are good for up to $5 million in business capital funding.
SBA Express Loans
An SBA Express Loan shares 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 actually get your money, but knowing whether you are approved or not can be useful.
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 usually carry higher interest rates than 7(a) loans, since the government guarantees less.
The SBA’s Military Reservist Economic Injury Disaster Loan Program (MREIDL) provides low-interest business loans to cover operating expenses (up to $2 million) when an “essential employee” is called up for active duty in the Reserve or National Guard.
Other small-business loan options for veterans
There are a variety of other small-business loan options for veterans as well. Navy Federal Credit Union offers programs for small businesses, and many states also offer programs that help veteran-owned and other small businesses get working capital. StreetShares is a lending platform that is owned and run by veterans, focusing on providing business funds to veterans and their communities.
Other benefits for veteran business owners
While the SBA doesn’t offer VA small-business loans anymore, it does offer business mentoring programs for veterans, including classes on military bases, online programs for women vets and training in how to bid on government contracts. The SBA also offers veteran entrepreneurship training programs to help veterans start and run their own businesses.
The bottom line
VA loans in the traditional sense ended in 2019. However, there are still several options for veterans to get small-business loans. For some, SBA Express or MREIDL may be the best option. Other veteran business owners may prefer getting their small-business loans through their local credit union, an online or peer-to-peer lender or a state program. For others, a personal loan, home equity loan or HELOC may be the best option.
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