Veteran SBA Loan Programs: Funding Opportunities for Military Entrepreneurs

SBA loan programs for veterans

Veterans have the same access to standard SBA loan programs as other entrepreneurs. The benefit is that a few programs are specifically designed and earmarked for eligible military entrepreneurs. Here's how the main veteran SBA loan programs work.

SBA 7(a) loans with the Veterans Advantage Program

The SBA 7(a) loan is the most flexible and widely used SBA loan program in general, but veterans get bigger benefits through the Veterans Advantage program. These include reduced or waived upfront guarantee fees on qualifying small business loans for veterans: for loans of $150,000 or less, the guarantee fee is waived entirely, and for larger loans, the fee is reduced.

Beyond the fee reduction, SBA 7(a) loans can fund almost any legitimate business purpose: working capital, equipment, inventory, real estate, hiring, business acquisition, and more. Veteran SBA loan amounts go up to $5 million and repayment terms up to 10 years for working capital and 25 years for real estate.

To qualify for the Veterans Advantage fee reduction, the business needs to be at least 51% owned and controlled by an eligible veteran, active-duty service member, National Guard member or reservist, current spouse of any of the above, or widowed spouse of a service member who died during service or from a service-connected disability.

SBA express loan for veterans

The SBA Express loan is a streamlined 7(a) option with faster approval, making it one of the best business loans for veterans. Rather than wait several days or even weeks for an answer, the SBA responds within 36 hours for veterans in this program. This veteran SBA loan offers amounts up to $500,000, which can cover many working capital and equipment needs, but without requiring the full documentation list of a standard 7(a).

Veterans and certain active-duty service members can qualify for a Veterans Advantage fee waiver on Express loans under $150,000. The Express program also extends to eligible lines of credit, which is useful if you need ongoing access to working capital rather than just borrowing a one-time lump sum of cash.

SBA microloans

For veterans earlier in their business journey or those who just need a smaller amount (to cover something like equipment, inventory, or a cash flow shortage), SBA microloans offer up to $50,000 through nonprofit intermediary lenders. Eligibility requirements are more flexible than a standard 7(a), and many of the nonprofits that administer the program specifically serve veteran entrepreneurs. Many programs also include business counseling and technical assistance, which can be especially valuable for veterans making the transition from military service to business ownership for the first time.

It's important to note that microloans can be used for working capital, supplies, fixtures, furniture, and equipment, but can't be used for real estate purchases or paying off existing debt.

Military Reservist Economic Injury Disaster Loan Program (MREIDL)

The MREIDL is a different kind of veteran SBA loan. Instead of being geared toward those starting or growing a business, it's designed to keep a business running if an essential employee is called up to active military duty. If your business depends on a key person who is also a military reservist, and they get unexpectedly deployed, the MREIDL provides working capital to cover operating expenses until they're back stateside.

Loan amounts are available for up to $2 million, with the maximum amount tied to the actual economic injury the business sustains. There are some pretty strict rules around what the cash can and can't be used for, as well.

Who qualifies for a veteran SBA loan?

To tap into the Veterans Advantage fee benefits, a business needs to be at least 51% owned and controlled by one or more of the following:

• Veterans, including honorably discharged veterans
• Active-duty service members eligible for the Transition Assistance Program
• Reservists and National Guard members
• Current spouses of any of the above
• Widowed spouses of service members who died in service or from a service-connected disability

Beyond those veteran-specific qualifications, standard SBA eligibility rules still apply. This type of funding is available to for-profit business operating in the U.S., which meet certain revenue and business history requirements.

Most SBA lenders want to see a personal credit score of at least 650 to 680, too, though some programs (particularly microloans) can be a bit more flexible. If you have a solid business plan and financial history, this can sometimes be enough to offset a limited credit history.

Military experience

Lenders aren't just looking at your credit score and revenue when you apply for a veteran SBA loan. For that reason, your military background actually matters here.

The experience of running a unit, managing logistics under pressure, and making decisions without having all the information in front of you translates pretty strongly to running a business, and lenders recognize that. Being clear about what you did in the military and how it translates to what you're doing in your business can be a really strong asset when applying for veteran SBA loans and other forms of small business funding.

Through the SBA's Office of Veterans Business Development (OVBD), veterans also have access to free resources that can help get there, including Veterans Business Outreach Centers, the Boots to Business training program, and SBDCs that specialize in serving veteran business owners.

Free resources for veteran entrepreneurs

Support around veteran SBA loans goes well beyond the funding. There are also free programs that exist specifically to help you prepare:

• Veterans Business Outreach Centers (VBOCs) — These are SBA-funded centers offering business training, mentoring, and loan application assistance for veteran entrepreneurs. Find your nearest one at gov.

• Boots to Business — This is a free entrepreneurship training program offered through the Transition Assistance Program for transitioning service members, veterans, and their spouses. It covers business fundamentals and business plan development.

• V-WISE (Veteran Women Igniting the Spirit of Entrepreneurship) — An online and in-person training program for women veterans and female military spouses.

• SBA Lender Match — A free tool at gov that connects you with approved lenders based on your business type and veteran SBA loan financing needs. This can be a really good starting point if you're not sure where to start.

• Small Business Development Centers (SBDCs) — Free consulting and low-cost training on business planning, financial projections, and loan applications, with locations throughout the U.S.

Final thoughts

Veterans Advantage program fee reductions keep real money in your pocket, if you're a qualifying veteran looking for a veteran SBA loan. Add in free training and various mentorship resources that most non-veteran borrowers don't have access to, and it's easy to see how veteran entrepreneurs are in a much stronger position to get funded than they might realize.

Use the resources. A business plan developed with help from a VBOC or SBDC will do more for your application than almost anything else you can do before walking into a lender's office.