Your Guide To Veterans Business Loans

Written by Banks Editorial Team
4 min. read
Written by Banks Editorial Team
4 min. read

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Did you recently transition from actively serving in the armed forces to civilian life? If a traditional job is not in the plans or you want to start a side business, chances are, you’ll need funding to get operations up and running. That’s where veteran business loans come in if you don’t have the cash on hand. You can also explore an alternative form of financing through a reputable lender, like National Business Capital, to secure capital for your new business venture.

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What Are Veterans Business Loans?

As the name suggests, veteran business loans are designed to help veteran entrepreneurs secure the funding they need to start or grow their businesses. But, unlike VA loans, which are mortgage products reserved for veterans and their spouses, these loans are not backed by the U.S. Department of Veterans Affairs.

Who Is Eligible for Veterans Business Loans?

Eligibility guidelines vary by lender, but most require that you meet specific criteria. For starters, you should have a business that’s at least 51 percent owned by an active-duty service member that’s a part of the military Transition Assistance Program, an honorably discharged veteran, a member (or reservist) of the National Guard, or a service-disabled veteran. Current or widowed spouses (due to service-related incidents) of these individuals also qualify for funding. 

Is It Hard to Get a Veterans Business Loan?

Not necessarily. If you meet the eligibility requirements and can demonstrate your ability to repay the loan, you likely won’t find it challenging to secure a veteran business loan. 

How Do You Apply for Veterans Business Loans?

Each lender has its own application process. Still, you’ll be required to gather certain documents and submit them to the lender for review when applying for a loan. This may include recent tax returns, financial statements, your company’s business plan, business licenses, business certifications, and other relevant information. 

The following will also be required to verify your history in the armed forces: 

  • Transition Assistance program participants: DD Form 2 (United States Uniformed Services Identification Card), DD Form 2648 (Preseparation Counseling Checklist), or DD Form 2648-1 (Preseparation Counseling Checklist For Reserve Component Service Members Released From Active Duty)
  • Honorably discharged veterans: Form DD 214 (Certificate of Release or Discharge From Active Duty)
  • National Guard members and reservists: DD Form 2
  • Service-disabled veterans: Form DD 214 or any documentation you have on hand to prove your disability is the result of a service-related incident 
  • Current spouses of veterans: Form DD 214 and documentation that proves your status as the spouse of a veteran
  • Current spouses of Transition Assistance program participants: DD Form 1173 (Next Generation Uniformed Services ID Card) and documentation to prove you’re a current spouse
  • Widowed spouses of veterans: any documentation to substantiate your status as the widowed spouse of a veteran

What Can Veterans Use the Funds For?

If you’re able to secure funding, there are several ways you can use the loan proceeds in your business. 

Startup Costs

Veterans who are just getting started and have minimal reserves can use a portion or all of the borrowed funds to launch their company. Common startup costs include registration fees with the state and county (if applicable), liability insurance, accounting software, training facility costs, payroll, supplies, marketing, and inventory. 

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Operating Expenses

It could take some time before your company turns a profit, but you can use the loan proceeds to cover the expense gap and keep operations running smoothly in the meantime. 

Hire Employees

Some companies are able to operate profitably with just a few employees, while others find success as a one-man show. The reality is that it’s challenging and risky to run the business alone for an extended period. Hiring employees can pay off in the long run, but it’s not always that simple, though, since payroll can come at a hefty cost, you’re not quite prepared for. Fortunately, veteran business loans are a way to cover these expenses. 

Purchase Property and Equipment

Property and equipment costs can seem exorbitant, especially when you’re just starting out. If you need to purchase either of these assets, taking out a veteran business loan could be a beneficial move.

Stocking Up Inventory and Supplies

Another common use for veteran business loans is for inventory and supply purchases. Having an adequate stockpile on hand is an effective way to avoid interruptions in business operations. 

Marketing

Word of mouth is an effective way to market your business. However, it’s also a good idea to invest in other forms of marketing, like website development, social media marketing, and digital/print advertisements. 

Where Can Veterans Get Business Loans?

Here are a few viable options to consider when seeking capital for your business: 

Traditional Banks and Lenders

Veterans with good or excellent credit scores and a steady source of income may find business loan options with competitive terms at traditional banks or credit unions. However, be mindful that the application process could be lengthy, and the lender will likely require a ton of paperwork to process your loan application. Furthermore, they typically limit business funding to entrepreneurs who’ve operated for at least two years.

Veteran Grants and Programs

Winning a grant is always the preferred option. As long as you use the funds for their intended purpose, you won’t have to repay the funds, allowing you to grow your business without worrying about the expense.  Otherwise, veteran programs that exist solely for the purpose of providing assistance to members of the armed forces and their spouses are typically a good resource for identifying funding opportunities. 

Alternative Funding

Another option: consider an online marketplace with over 75 veteran-friendly lenders, like National Business Capital, to take the guesswork out of finding the best solution. Lenders in the network offer flexible small business loans, SBA loans, business lines of credit, and equipment financing solutions. Here’s an overview of how the process works: 

  1. Complete the digital application. 
  2. Connect with an experienced Business Finance Adviser from the National Business Capital team to identify the most suitable lending option. 
  3. Finalize the loan application and get funded in as little as a few hours. 

It’s that simple! Get started today by applying online. You can complete the form and view real-time offers in minutes with no impact on your credit score.

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