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Best Small-Business Loans for Veterans of April 2024

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Veteran business loan options

Veteran small-business loans are available through banks, alternative lenders, nonprofit organizations and the SBA.

SBA loans for veterans

SBA loans are issued by banks, credit unions and online lenders. And while they’re partially guaranteed by the SBA — which can make them easier to qualify for — you’ll still need strong credit and solid business financials to qualify.

SBA Express loans

Veterans can borrow up to $500,000 through the SBA’s Express loan program. Upfront guarantee fees are waived for veterans, reservists, National Guard members and spouses who qualify.

SBA Express loans also have a quicker turnaround time than other SBA loans but the underwriting criteria can be strict. You’ll likely need a minimum FICO score of 650, strong annual revenue and at least two years in business to get an Express loan.

Military reservist loan

The Military Reservist Economic Injury Disaster Loan (MREIDL) is a program through the SBA that can provide financial assistance if you have an essential employee who is a military reservist and gets called to active duty. The maximum loan amount is $2 million and funds can be used to cover regular business operating costs. The loan amount is limited to the actual economic incurred and it can’t be used to start or expand a business.

SBA Standard 7(a) loans

Although the SBA 7(a) loan program does not offer any specific benefits for veterans, these loans are a great option if you need a larger loan amount than the Express program offers. SBA 7(a) loans can have maximum loan amounts as high as $5 million and loan terms as long as 25 years, in some cases.

SBA Community Advantage loan

The SBA Community Advantage loan program, which was designed to provide funding to underserved business owners, including veterans, was discontinued on Sept. 30, 2023. However, lenders that were involved in the program can continue to prioritize funding for veteran borrowers (and others) by contacting the SBA to become a Community Advantage Small Business Lending Company.

Patriot Express loan

The Patriot Express program is a now-defunct SBA program that offered streamlined paperwork and enhanced guarantee and interest rates on loans to veterans, reservists and their spouses who were seeking business funding. The program was discontinued in December 2013.

Bank business loans

Small-business loans from banks typically have the lowest interest rates and best terms, but they can be difficult to access. Many banks require that you have several years in business, a credit score in the 700s (although high 600s may be considered) and strong revenue to qualify for financing.

If you think your business may be eligible for a bank loan, look for local and national institutions that offer military discounts or other benefits to veteran-owned business:

Huntington Bank

Huntington Bank has a business loan program available to veterans where the origination fee is waived and the bank pays the SBA fees for the borrower.

Bank of America

Bank of America offers veterans a 25% discount on loan administration or origination fees for certain small business loans, including secured business loans and commercial real estate loans.

Community banks

California Bank & Trust and Zions Bank (serving Utah, Idaho and Wyoming) are examples of community banks that have small business diversity programs for veteran-, women-, minority- and LGBTQ-owned small businesses. These programs offer wider access to loans through special underwriting guidelines.

Credit unions

Credit unions can be an option for veterans looking for business financing. Similar to banks, credit unions offer competitive interest rates and terms to their members. However, you’ll also typically need to be an established business with good credit and financials.

Navy Federal Credit Union

Navy Federal Credit Union offers a range of small business loans, including lines of credit, term loans, commercial real estate loans, equipment financing and business auto loans. Membership is open to veterans and active duty members of the Army, Marine Corps, Navy, Air Force, Coast Guard, National Guard and Space Force, among other categories.

Service Credit Union

Service Credit Union also caters specifically to veterans, active duty military members, as well as Department of Defense employees. It offers SBA loans, lines of credit, equipment financing, commercial mortgages and commercial vehicle loans.

Credit unions located in your local community may also be an option for business loans.

CDFIs

Community development financial institutions (CDFIs) are private financial institutions that support targeted underserved communities with loan capital, which for some may include U.S. veterans. Underwriting requirements at CDFIs can be more flexible than banks or online loans.
Some CDFIs that support veteran entrepreneurs can be found through the online platform Veteran Loan Fund. In addition to being matched to a lender, you may also be able to access below-market-rate loan funding and free business coaching. For example, Colorado Enterprise Fund, Inc.’s VALOR Program offers discounted rates for veterans on loans between $5,000 and $500,000.

Online loans

If you just launched your business, or have a lower credit score (below 690), you might look into online lenders. These lenders tend to have more flexible qualification requirements but higher interest rates.
They offer a variety of products, such as term loans, lines of credit, equipment financing and invoice factoring — and can sometimes provide funding as fast as the same business day.

Microloans

Nonprofit organizations often focus on funding traditionally underserved businesses in their area, offering smaller loan amounts of up to $50,000.

For example, PeopleFund, a microlender and community development financial institution in Texas, offers fast working capital loans of up to $25,000, as well as other financing options. PeopleFund provides discounts on interest rates for veterans and says 14% of its borrowers are vets.
If you’re a new business or have bad credit, you may still be able to qualify for a microloan.

Are VA business loans available to veterans?

Although the Department of Veterans Affairs (VA) guarantees mortgages through the VA home loan program, it doesn’t have any such program for business loans.
Similarly, the SBA doesn’t offer specific VA business loans either. The SBA Veterans Advantage program, which launched in 2014, offered certain concessions to veterans applying for specific SBA loans. Currently, fee relief is available to veterans who are approved for SBA Express loans. Under the 2020 CARES Act, the upfront guarantee fee for this specific SBA loan program is permanently fully waived for veteran-owned businesses.

Are there startup business loans for veterans?

Lenders generally prefer to do business with established companies that have strong cash flow. This often disqualifies startups with less than a year of operating history and little revenue.

However, veterans with new businesses still have options.

The SBA microloan program caters to startups and businesses in underserved communities. These loans are issued by certified development companies and nonprofit organizations, which often focus on working with businesses owned by veterans, women and minority groups.

If you have good personal credit, alternative options for your startup also include:

  • Business credit cards typically provide up to $50,000 in revolving credit, meaning you can borrow and repay from the credit card as needed, and pay interest only on withdrawn funds.
  • Personal loans for business offer a lump sum of cash, with a fixed interest rate and repayment terms. But you’ll be on the hook for repayment, not your business.

Both options are typically unsecured, meaning you won’t have to put down collateral — an asset, such as real estate or inventory — to qualify.

What qualifies as a veteran-owned business?

To qualify as a veteran-owned business, your business must typically be 51% owned by someone in one of the following categories:

  • Active-duty military service members participating in the Transition Assistance Program.

  • Honorably discharged or service-disabled veterans.

  • Reservists and active National Guard members.

  • Current spouse of a veteran, active-duty service member, reservist or guard member.

  • Widowed spouse of a service member who died in service or from a service-related disability.

How to apply for a veteran small-business loan

The loan application process will vary from lender to lender. In general, you may need to provide basic information such as:

  • Military identification.

  • Background information about your business.

  • Business financial documents such as profit and loss statements, tax returns or bank statements.

If you’re applying for a small-business loan that offers discounts for veterans, like the SBA Express loan program, you’ll likely need to provide documentation to show that the business is at least 51% owned by a veteran or their spouse.

You’ll also need to meet general small-business loan qualifications, such as credit score, revenue and time in business. The exact veteran business loan requirements will vary by lender.

Other resources for veteran-owned businesses

Government and nonprofit organizations offer financial resources, grant programs, business training and other assistance for veteran-owned businesses. Here are some of the available resources:

  • Veterans Business Outreach Centers. These centers offer workshops, training, counseling and other services to help veteran business owners start, grow and expand their businesses. There are VBOCs across the country — and these organizations can help connect businesses with SBA partners, including community lenders and other resources.
  • Veteran entrepreneurship training programs. The SBA works with nonprofit organizations and universities across the U.S. to provide in-depth business training programs for veterans and their spouses. These initiatives include the well-known Boots to Business and Veteran Women Igniting the Spirit of Entrepreneurship programs, as well as the Service-Disabled Veteran Entrepreneurship Training Program, which offers training to service-disabled veteran entrepreneurs looking to start or grow a small business.
  • Institute for Veterans and Military Families (IVMR) at Syracuse University. IVMF is one of the organizations that partners with the SBA to offer veteran entrepreneurship training programs, most of which are free. In addition to training programs like Boots to Business, IVMF offers conferences, summits and other resources to veterans and their families to support their entrepreneurial efforts. Some programs are offered online or available at partner institutions.
  • Veteran Federal Procurement Entrepreneurship Training Program. This federal procurement training program is funded by the SBA, the State of Maryland and corporate sponsorships. It’s designed for veteran-owned businesses and available through the Veteran Institute for Procurement (VIP). Five curriculums are available with placement generally based on your level of participation in the federal market. VIP training is free but you will need to complete the course in Washington D.C. Meals and lodging are also provided at no cost, but your travel expenses are your responsibility.
  • Office of Small & Disadvantaged Business Utilization. Although the VA doesn’t offer veteran business loans, the OSDBU is a part of the agency that provides a variety of resources for veteran entrepreneurs. Through the OSBDU website, you can find upcoming webinars and training sessions. To get verified to participate in the VA’s Vets First program, visit the Veteran Small Business Certification portal managed by the SBA.
  • Small-business grants for veterans. Government agencies, nonprofit organizations and private companies all offer small-business grants for veterans. You can search Grants.gov to find all active government grants for businesses, or use a free website like GrantWatch to filter specifically for grants for vets.
  • Second Service Foundation. The Second Service Foundation, formerly the StreetShares Foundation, is a nonprofit organization dedicated to supporting military entrepreneurs. The organization offers an annual grant program — the Military Entrepreneur Challenge — as well as networking events, coaching, training and other resources for business owners.
  • SBA 8(a) program. The SBA offers this business development program to eligible businesses, which can include those owned by veterans. The SBA 8(a) program provides small businesses with a certification that can improve their chances of winning government contracts, as well as help navigating the bidding process.

Find the right business loan

The best business loan is generally the one with the lowest rates and most ideal terms. But other factors — like time to fund and your business’s qualifications — can help determine which option you should choose. NerdWallet recommends comparing small-business loans to find the right fit for your business.



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