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Best Small Business Loans for Veterans with Bad Credit: StreetShares
If you have a credit score under 700, StreetShares is an excellent choice to get a loan or line of credit. StreetShares is an online lender founded by veterans with a focus on helping veteran small business owners get the funding they need. StreetShares offers loans ranging from $2,000 to $100,000 and lines of credit ranging from $5,000 and $100,000 for terms between three to 36 months. A business cannot borrow any amount that is greater than 20% of its annual revenue. APRs start at 8%, which is especially good compared to other alternative lenders.
To qualify, you only need a minimum credit score of 600 and be a U.S citizen or permanent resident. Your business must also have $25,000 in annual revenue. Loans require one year in business, and lines of credit require two years. At the end of your application, you can pitch your business and the reason you need funds, which can help speed up the process. Since StreetShares is a peer to peer lender, investors will compete to fund your loan, and more compelling pitches may get more interest. You will usually get funds to your business bank account within a week, which is speedier than a typical bank loan.
- Interest rates of 8.00% - 39.99%
- Loans and lines of credit up to $2,000 - $100,000
- Terms up to 3 - 36 months
- Funding time: As fast as same day
- Lenient eligibility requirements
Best Small Business Loans for Veterans with Good Credit: SBA Express and CA Loans
One of the most popular SBA loan programs, the 7(a) loan, offers two types of loans that are great for veteran small business owners. The first is the Express Loan program, which provides basic 7(a) loans up to $350,000 for up to seven years with expedited review from the SBA (a response is typically given in 36 hours or less). Veteran business owners who apply through the Express Loan program also benefit from the SBA Veterans Advantage, meaning all upfront fees are reduced to zero if the loan application is approved. For these loans, lenders will normally want to see creditworthy borrowers with financially healthy businesses.
Another type of 7(a) that is excellent for veteran business owners is the Community Advantage Loan. CA Loans are offered to businesses in underserved markets, including businesses that qualify for the SBA Veterans Advantage. CA Loans are offered up to $250,000 with terms up to 10 to 25 years, and borrowers have access to management and technical assistance. Borrowers must show their creditworthiness and viability of their business idea to qualify. Qualifying is not limited by a business's revenue or amount of collateral available.
- 5.75% - 10.00% interest rates
- Loans up to $250,000 (CA) or $350,000 (Express)
- Terms up to 7 years (Express) or 10-25 years (CA)
- Several weeks to fund
- Stricter eligibility requirements
Best Small Business Startup Loans for Veterans: Accion
Accion is a great choice for veterans with startups or new businesses, as the lender offers special startup financing and educational resources for veterans. Accion is a nonprofit organization that offers loans for underserved businesses, and the organization is committed to helping veterans qualify for funding if they are not currently eligible by offering workshops and resources. Accion has partnered with Syracuse University’s Institute for Veteran and Military Families to offer these programs to veterans and their spouses. If you aren’t eligible now, with Accion’s assistance, you may qualify to apply again in as few as three months.
Startups can borrow up to $10,000 with interest rates starting at 11%. The application takes 15 minutes to complete, and you will hear from Accion within two business days. To qualify, you need a credit score of 575 and must demonstrate that your business has the cash flow to make repayments. Your business cannot be over 30 days late on any bills (certain exceptions are made for emergency situations). For businesses that are less than six months old, the business must be located at home or in an incubator. Other requirements may apply.
- Interest rates start at 10.99%
- Loan amounts range from $300 to $1,000,000
- Terms up to 5 years
- Funds in a few weeks
- Stricter eligibility requirements
Best Small Business Grants for Veterans: BusinessUSA
The United States’ government BusinessUSA website is one of the best places to look for federal and state financing programs for your small business, especially if you are a veteran. While BusinessUSA does not offer loans or grants directly, it shows all government financing options for which you may be eligible. To see your financing options, you’ll need to fill out a questionnaire that asks about your business’s location, planned use of the funds, special group status (e.g., veterans, women, minorities, etc.) and industry of your business. After filling in the questionnaire, you’ll see a list of all state and federal programs you may qualify for, preferred private lenders in your state, SBA microlenders and SBA offices in your state. You can also access BusinessUSA through the Department of Veteran Affairs Veteran Entrepreneur Portal.
- Variety of state and federal financing programs
- Specific financing programs for veterans
- Loan and grant amounts and terms vary
- Eligibility requirements vary
Best Small Business Loans for Veterans With Active Duty Employees: SBA MREIDL
If you have an employee called to active duty, SBA Military Reservist Economic Injury Disaster Loans (MREIDL) are a great option for getting financing to cover the lost revenue or opportunities from that employee leaving. The U.S. Small Business Administration offers MREIDL for small businesses that cannot cover typical expenses because an essential employee must temporarily leave to fulfill his or her position in the military. The loan is meant for working capital and cannot be used for debt refinancing or business expansion.
You can apply online beginning on the day that your employee is called to active duty until one year after the employee completes his or her duty. To apply, you will need income tax returns from the past three years, personal financial statements and current business balance sheets. After you complete your application, an inspector sent by the SBA will assess any damage costs.
To qualify, the SBA must determine that you don’t have other non-government funding sources available. You must also demonstrate your creditworthiness and ability to repay. These loans require real estate collateral for amounts over $50,000 (if unavailable, you can put up other business assets). Interest rates are 4% with terms up to 30 years. The SBA will determine the loan amount, taking into consideration insurance benefits and other funding sources. While the maximum loan amount is $2 million, the SBA can offer larger amounts if the business is an important source of employment in its community.
- 4% interest rate
- Terms up to 30 years
- Loans up to $2 million
- Funding times vary (first come, first served)
- Stricter eligibility requirements
Summary of Best Small Business Loans for Veterans
For quick comparison, we've summarized our findings on the best lenders and loan programs for veteran small business owners in the table below.
|Veterans with lower credit scores||StreetShares||8.00% - 39.99%|
|Veterans with good credit||SBA Express and Community Advantage loans||8.00% - 10.00%|
|Small business startup loans||Accion||10.99%+|
|Small business grants||BusinessUSA||N/A|
|Veterans with employees called to active duty||SBA MREIDL loans||4.00%|
What to Consider When Getting a Business Loan as a Veteran
When applying for small business funding as a veteran, you should consider your specific situation to see what special programs and benefits you can qualify for. As we showed above, there are many programs that are specifically for veterans that offer lower interest rates, educational resources or grants. While there are many products specifically for veteran small business owners, you may also want to consider a conventional bank loan or a loan from alternative lender for particular circumstances.
Banks can offer large loans up to several million, making them a good option for significant investment in your business (i.e., purchasing real estate or long-term machinery/equipment). If you need money quickly or can't qualify for a bank loan, you may want to consider an online loan from alternative lender. Many of these alternative lenders can fund loan offers within several days, and while APRs are higher, you can still get a good rate if you have strong qualifications. Alternative lenders are also a better choice if you need a smaller loan amount (i.e., $50,000 to $200,000), but need more than a microloan.