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 veterans looking for small business loans.
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. 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.
- Service-disabled 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 SBA 7(a) loans. Loans are good for up to $5 million in funding. Businesses must be for-profit and must not be delinquent on any debts to the U.S. government.
SBA Express Loans
SBA Express loans share 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 of the loan amount.
Military Reservist Economic Injury Disaster Loan (MREIDL)
The SBA’s Military Reservist Economic Injury Disaster Loan Program (MREIDL) provides low-interest business loans when an “essential employee” is called up for active duty in the Reserve or National Guard. The loan provides up to $2 million to help business owners cover operating expenses that they would have been able to pay if the employee had not been called up.
Other small-business loan options for veterans
There are a variety of other small-business loan options for veterans. Navy Federal Credit Union offers programs for small businesses, and many states offer programs that help veteran-owned and other small businesses get working capital.
Other benefits for veteran business owners
While the SBA does not offer VA small-business loans anymore, it does offer business mentoring programs for veterans, including classes on military bases, online programs for women veterans 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.
|SBA program||What it does|
|Boots to Business||Training and resources available to veterans via domestic and international military installations|
|Office of Veterans Business Development (OVBD)||Entrepreneurial resources such as workshops, mentorship and training, with locations across the country|
|Service-Disabled Entrepreneurship Development Training Program (SDVETP)||Training grant for veteran business owners who are service-disabled|
|Women Veteran Entrepreneurship Training Program (WVETP)||Women-specific resources to help new and growing small businesses|
Frequently asked questions about small business loans for veterans
Can I get a small business loan with bad credit?
Although you’re not likely to receive the best interest rates, it’s still possible to receive a small business loan with bad credit. Before choosing the best bad-credit loan for your small business, be sure to compare loan terms, interest rates and fees.
Can I get a SBA VA (Veterans Advantage) business loan?
Veterans Advantage small business loans are no longer available. However, small business owners have several options for funding, including an SBA 7(a) loan, an SBA Express loan and a Military Reservist Economic Injury Disaster Loan (MREIDL).
Does the VA offer business loans?
The Department of Veterans Affairs does not offer business loans. Instead, the VA’s website directs veterans to check out the SBA’s offerings.
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 unions, online or peer-to-peer lenders or state programs. For others, a personal loan, home equity loan or home equity line of credit (HELOC) may be the best option.