Compare Small Business Loans
As their enterprises grow, military veterans who own businesses may need to seek out loans to help pay for expenses or expansion. Some lenders offer business loans for veterans specifically, while others have general loan products that can work well for veteran-owned businesses.
There are plenty of choices for obtaining a VA business loan, from traditional banks and credit unions to flexible online-only lenders, though your credit score, the age of your business, and its revenue may limit the number of available options.
Summary of the best small business loans for veterans
VA small business loans are widely available, but lenders often have vastly different products and borrowing requirements. To be included on our list, lenders needed to offer generous loan amounts, have transparent rates and terms and be available to a wide variety of veteran business owners.
|SBA loans||Smartbiz||5.04%-10.29% APR|
|Bad credit||Fora Financial||Factor rates from 1.1 to 1.35|
|Strong credit||Funding Circle||11.29% - 30.12%|
|Established businesses||Navy Federal Credit Union||Not available|
|Businesses with active-duty employees||SBA MREIDL||4% interest rate|
Best for SBA loans for veterans: Smartbiz
SBA 7(a) Details
- Loan amount: Up to $5 million
- Rates: Variable: Prime plus 2.25% to prime plus 4.75%
- Term: 10 or 25 years
- Min. Credit Score Required: 680
The federal government’s Small Business Administration (SBA) previously offered the Veterans Advantage 7(a) loan, but the program is now defunct. That means there are no longer SBA loans for veterans specifically, though veterans can still apply for SBA loans through Smartbiz, including:
7(a) loans: These loans are considered SBA’s flagship product, though they come in several forms and sizes. Most 7(a) loans offer up to $5 million, have terms of 10 or 25 years, and charge interest rates that range from prime plus 2.25% to prime plus 4.75% for variable-rate loans and 5%-8% for fixed-rate loans. The minimum credit score for 7(a) loans is typically 680. Veterans are permanently exempt from paying guaranty fees on 7(a) Express Loans.
504/CDC loans: These loans are intended to help a small business expand or modernize through commercial real estate and equipment purchases, or improve existing facilities. In general, an SBA-backed lender covers 50%, a Community Development Corporation covers 40% and the business owner covers the remaining 10% as a cash down payment. Financing is available up to $5 million and repaid in terms of 10, 20 or 25 years. To qualify, a business must have a tangible net worth of less than $15 million. The minimum credit score for these loans is usually 680.
Microloans: Intended for very small businesses, SBA microloans are offered in amounts up to $50,000. Requirements vary, but the proceeds can’t be used for real estate purchases or paying down debt. The maximum repayment term is six years, and interest rates are typically between 8% and 13%. You’ll need a credit score of at least 640 to qualify, in most cases.
Best for veterans with bad credit: Fora Financial
- Loan amount: $5,000 - $500,000
- Rates: Factor rates from 1.1 to 1.35
- Term: 3 - 15 months
- Min. Credit Score Required: 500
Though not specifically reserved for veterans, Fora Financial’s short-term business loan has low credit score requirements, making it ideal for any business owner with bad credit. Fora’s product isn’t a traditional small business loan, but a short-term loan with terms no longer than 15 months, and there are early payoff discounts. The loans provide $5,000 to $500,000 of working capital depending on your needs.
Their minimum credit score requirement is very low — only 500 — making it a potentially great option for veterans with bad credit. Just keep in mind that Fora Financial does require no open bankruptcies, at least six months in business and a minimum of $12,000 in monthly sales.
Most small business lenders charge interest using APRs, but Fora Financial uses factor rates, which can make it harder to compare to traditional loans. Their factor rates range from 1.1 to 1.35, and they also charge a 2.5% origination fee.
Best for veterans with strong credit: Funding Circle
- Loan amount: $5,000 - $500,000
- Rates: 11.29% - 30.12%
- Term: 3 - 600 months
- Min. Credit Score Required: 660
Similar to financing from Fora Financial, Funding Circle doesn’t specialize in business loans for veterans. However, those with solid credit can benefit from this lender’s flexible options.
Fixed-rate loans at Funding Circle are available in amounts from $5,000 - $500,000, and terms range from six months to five years. The APR ranges widely: 11.29% - 30.12%. Funding Circle charges a one-time origination fee of 3.49% to 6.99% determined by your credit history.
In terms of eligibility, Funding Circle looks for personal credit scores of 660 or higher, along with no bankruptcies in the past seven years. The lender also requires you to have been in business for at least two years, though the lender says their underwriting approach is tailored to each small business. Funding Circle’s loans are not available in Nevada.
Best for established veteran-owned businesses: Navy Federal
- Loan amount: Up to $50,000
- Rates: Not available
- Term: Up to 60 months
- Min. Credit Score Required: Not available
Navy Federal Credit Union serves customers with ties to the U.S. military, so to borrow, veterans must be a member of the credit union. As a nonprofit credit union, Navy Federal’s rates and fees may be lower than banks or online lenders.
Navy Federal offers small business term loans, real estate loans, business and commercial vehicle loans and business lines of credit. Its standard term-loan applications are for amounts up to $50,000, though you can speak with a lending representative to find out if you can qualify for more.
Navy Federal prefers applicants to have at least two years in business. In the application process, you’ll have to provide two years of your personal tax returns plus a business plan with three years of cash flow projections. If your business is less than two years old, Navy Federal will consider loaning you up to $25,000 if you have excellent credit and strong personal cash flow. They don’t publish their interest rates, but the rates are based on criteria that include your business’s capacity to pay the loan back, available capital and collateral. Navy Federal charges a $150 origination fee, though there is no prepayment penalty.
Best for businesses with active-duty employees: SBA MREIDL
- Loan amount: Up to $2 million
- Rates: 4% interest rate
- Term: Up to 30 years
- Min. Credit Score Required: Not available
If your business employs reservists that are called to active duty, one option is to apply for the SBA’s Military Reservist Economic Injury Disaster Loan (MREIDL). This program helps eligible small businesses cover the cost of operating if their reservist employees are activated.
These loans are available in amounts up to $2 million, though the actual amount is calculated based on the economic impact your business faces. If your business can fund its recovery, you aren’t eligible for the loan.
The interest rate for these loans is 4%, with a term of up to 30 years. Keep in mind that the loan can’t be used to expand, cover lost income or profits, refinance long-term debt or used as an alternative to regular commercial debt. Its sole purpose is for "ordinary and necessary operating expenses," according to the SBA.
What to consider when searching for business loans for veterans
You’ll find that you have plenty of options to consider as you seek out a VA business loan, but the number of choices can be overwhelming. Here are some important factors to think about:
- How much do you need to borrow, and how long do you need to repay it? Some lenders offer a wide range of borrowing amounts and length terms, while others are more limited in how much they can offer or how long you can repay. Pay close attention to the terms as you compare options.
- What type of lender should you use? Banks and credit unions may be able to offer the most favorable rates and terms, but they tend to have stricter loan requirements and a lengthier application process. Online alternative lenders typically fund faster and have more lenient borrowing requirements than traditional financial institutions, but this could also translate to higher interest rates or fees.
- How’s your credit? The state of your credit plays a large role in which types of VA small business loans are available to you. If you’re not sure where you stand, check your credit and make sure your score lines up with the minimums required by lenders.
- Do they offer any programs for veterans? Some lenders offer specialized products or benefits for veterans, though it’s still possible to score a great business loan through a lender that doesn’t.