Anyone considering launching a startup will need to know about business loans and grants, especially those which are tailored to their unique situation. Many veteran entrepreneurs are looking to start their own company, and this can be a great path to success, particularly when you consider the many skills that active service teaches which translate perfectly into the business world.
In order to get up and running and maintain the company, it is likely that you will need to consider taking out a loan or receiving a grant to provide enough capital. Financing is a huge concern for many entrepreneurs, but business grants and loans can help any enterprise to grow.
Challenges Applying for Business Loans
Unfortunately, not many veteran-owned companies survive when compared to those operated by non-veterans. So, what is the reason for this? Funding has been a significant obstacle for those that have served, and this is for a few different reasons.
First, active duty can lead to financial challenges when adjusting to civilian life, so many lenders are reluctant to offer small business loans to those returning from service. On top of this, lenders may look at a resume and see a lack of business and work experience. Unfortunately, many do not see the numerous transferable skills that service can bring to the professional world, such as leadership, communication, teamwork, discipline, and focus.
Solutions for Veterans Seeking Funding
Fortunately, there are alternatives available for those that have served and are now looking to launch a startup. There are small business loans and grants available specifically for veterans which can help them to get their startup up and running. Before making applications, it is essential to make sure that you are able to show financial institutions that you are a responsible borrower. It is for this reason why it is a good idea to spend time making a detailed business plan, carrying out market research and improving your credit score.
Veteran Business Outreach Centers: A great place to start is a Veteran Business Outreach Centre; there are 15 centers across the country. These excellent centers give guidance, where you can access management courses and qualified referrals for independent grants to open your own business. These centers are managed by the Small Business Administration (SBA) who are an important resource for any veteran-turned-entrepreneur.
VA Loans: Following on from this, VA Loans are a favorable loan option which is made available from the SBA to soldiers or veterans or their wives or widows. Unlike grants, these are standard loans that will require repayment, and there are three types available.
- SBA Express Loan Initiative: A Veteran’s Advantage program that waives upfront guaranty fees for those that qualify with a maximum of $350,000 available to borrow.
- SBA 7(a) Loan Program: Available for both veterans and non-veterans, this program features upfront guaranty fees of zero for loans of $125,000 or less. Those that borrow more than this figure have a 50% reduction of guaranty fees.
- Military Reservist Economic Injury Disaster Loan (MREIDL): A loan which provides working capital to any company that could have or would continue to meet obligations had the owner not been called up for service.
SBA Loans: These loans are a good option for veterans who already have a business up and running. This is because the government partially guarantees them, so there is not as much risk for the financial institution who is lending the money. This guarantee can be as much as 85% of the loan amount, but SBA loans are notoriously difficult to apply for, and you will need a lot of documentation (and patience). Additionally, the minimum requirements can be difficult to meet; you will need 2+ years of business experience, 640+ personal credit score and $100,000 in annual revenue to qualify for SBA loans. If you do not qualify now, you could always consider trying again a few years down the line once your company is up and running and found some success.
Private Grants: It is also highly worth noting that those who have served and seek private grants are much more likely to succeed if you do not have to repay the funding. The Veteran Business Outreach Centre will be an excellent place to start as you will be given qualified referrals, but there are many great options when it comes to private grants for vets which you can find by looking online. In addition to providing funding, many of these private grant programs can also provide helpful support and guidance to get you up and running and to develop fundamental business skills.
How to Apply for Business Loans & Grants for Veterans
It is clear that there are some great options for veterans looking to secure a loan or grant, but how can you go about achieving this funding for your business? It will depend on who the financial institution is, but many programs are difficult to qualify for. Requirements often involve having a certain credit score, having a business plan that clearly shows that you can repay the loan and making a downpayment. There are many obstacles to overcome, but military veterans are well equipped to deal with such challenges. Those that can secure funding can often go on to find great success as an entrepreneur partly thanks to their experience in active duty.
It is understandable that those that have served have aspirations to start up their own company and spending time in the U.S army can teach many vital skills that still evade many entrepreneurs. Despite this, it can be challenging to secure business loans for women and men that have served which can make it hard to both get off the ground and find success. Fortunately, there are a few alternative options in the form of federal and private loans and grants for veterans. These can be hard to qualify for, but if you are able to, then they can provide everything you need to get started. Additionally, there are many helpful resources that can assist with other areas of starting a business when you return from service.