SBA Loans For Veterans: Guide To SBA VA Loans: Rates, Requirements, & How To Apply
The SBA's Veterans Advantage loan program helps give veteran-owned businesses the financial support they need to be successful. Find out the benefits in our guide.
SBA loans for veterans are essential to America’s small businesses. After serving their time in the military, many veterans choose to start a business. In fact, military veterans own about 7.5% of the businesses in the United States. Just like any other small business owner, there comes a time when these entrepreneurs may seek out an SBA loan, whether it’s for purchasing equipment, expanding the business, or funding a startup project.
If you are a veteran who is looking for SBA loans or startup loans, you have come to the right place. Keep reading to learn what SBA loans are available for veterans, what the eligibility requirements are, and how to apply.
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What Is The SBA?
SBA stands for Small Business Administration. It’s a government organization that assists small businesses.
Business owners have access to education, information, and training through the SBA. The SBA serves as an advocate for small businesses and provides a critical piece of the entrepreneurial puzzle: business financing.
Learn more about the Small Business Administration in our guide to SBA loans for small businesses.
SBA Loan Programs For Veterans
SBA loans for veterans include two main funding programs specifically designated for military vets:
- Veterans Advantage Guaranteed Loan Program
- Military Reservist Economic Injury Disaster Loan Program (MREIDL)
Read on to learn more about these programs and other SBA resources for veterans.
Additional SBA Resources For Veteran-Owned Businesses
In addition to the two loan programs, the SBA also provides a variety of resources to give veterans the tools they need to succeed in business. SBA training programs for veterans include:
- Boots to Business
- Women Veteran Entrepreneurship Training Program
- Service-Disabled Veteran Entrepreneurship Training Program
- Veteran Federal Procurement Entrepreneurship Training Program
The SBA also offers government contracting opportunities for military-owned businesses. You can visit the SBA’s website for the specifics on these SBA veteran resources and others.
Note that the SBA does not offer any grants to veterans. However, you can find other business grant options in our guide to the best business grants for veterans.
SBA Veterans Advantage Guaranteed Loans
The Veterans Advantage Loan Program is a popular choice for veterans because you can use the loan for most business purposes, such as expanding or acquiring a business, purchasing equipment, working capital, or debt refinancing.
SBA Veteran Loans Program Terms, Rates, & Fees
These are the current rates and fees for the SBA Veterans Advantage Loan Program:
|Borrowing Amount||Up to $5 million|
|Term Length||Usually 5-10 years for working capital and equipment; up to 25 years for real estate|
|Percent Guaranteed by SBA||50%-85% depending on loan amount and loan program specifics|
|Interest Rate||Current SBA loan rates|
|Guarantee Fees||Between 0% and 3.75% depending on loan amount; ongoing service fee of 0.55%|
|Borrower Requirements||The business:
Veteran SBA Loan Rates: What To Know
Veteran SBA loan rates vary depending on the lender issuing the loan and the specifics of the loan in question. The SBA sets the maximum rates SBA-partnered banks can charge for SBA loans, including SBA Veterans Advantage loans. These rates are normally based on the prime rate.
How Can Veterans Benefit From The SBA’s Fee Relief On Small Loans?
Small SBA Veterans Advantage loans less than $150,000 have a 0% upfront guaranty and no annual service fee. On an SBA Express Loan for veterans up to $350,000, the guaranty fee is still zero, but the annual service fee will apply to loans above $150,000.
What Is The Veterans Advantage 7(a) Loan Program?
The Veterans Advantage Loan Program is part of the SBA’s most popular program — the SBA 7(a) Loan Program. When you apply for a Veterans Advantage Loan, you go through the standard SBA 7(a) Loan process (or optionally through the SBA Express Loan process if the loan is for $350,000 or less).
The main advantage of the SBA’s VA loan program is that veterans have access to reduced guaranty fees compared to other borrowers.
One of the most significant drawbacks to an SBA Veterans Advantage 7(a) Loan is the timeline for receiving the money. The application, approval, and funding process can take months in most cases. However, the SBA Express Loan program can provide faster approval.
How To Qualify For A Veterans Advantage Loan
SBA 7(a) Loan Requirements
To qualify for a Veterans Advantage Loan, you must meet the requirements for an SBA 7(a) loan. These include:
- Must run a for-profit business
- Must meet the SBA definition of a small business
- Must prove you can repay the loan
- Must not be delinquent on any debts or have any recent bankruptcies
Learn more about 7(a) qualifications in our guide to SBA 7(a) loan requirements.
Proof Of Veteran Business Ownership
You must show that your business is at least 51% owned and controlled by veterans in addition to meeting standard 7(a) loan requirements. The SBA definition of veterans includes:
- Active-duty military in the Transition Assistance Program
- Reservist or National Guard member
- Spouse of any of the above, including those widowed because of death during service or from service-related disabilities
How To Apply For An SBA Veterans Advantage Loan
For the SBA Veterans Advantage Loan Program, you must find a qualified lender to work with, such as a bank or credit union.
The SBA offers a Lender Match service that connects businesses with a lender in their area. While some applications can be completed online, lenders generally require a phone call or in-office visit by the applicant.
After getting in touch with a lender, you will need to put together an application. You must be prepared to show that you can repay the loan and operate your business successfully. The application process will require additional documentation, including:
- Business and personal income tax returns
- Financial statements, projections, business certificates, and licenses
- A business plan
- SBA forms such as DD Form 214, DD Form 1173, or a different relevant form
Need an SBA lender? Check out these best SBA lenders for veterans.
Military Reservist Economic Injury Disaster Loan Program (MREIDL)
The Military Reservist Economic Injury Disaster Loan Program is designed to help cover business operating costs while a reservist veteran is called up to active duty. Military reservists and members of the National Guard who face economic hardship during or after a deployment can get the financing they need for their business with an MREIDL.
MREIDL Program Terms, Rates, & Fees
These are the current rates and fees for an MREIDL:
|Borrowing Amount||Up to $2 million|
|Term Length||Up to 30 years|
|Collateral||Required on all loans over $50,000|
While the SBA does typically require collateral on Military Reservist EIDL, it’s important to note that the SBA will not turn down a loan simply for lack of collateral. Still, the borrower will be required to put up any available collateral, including real estate.
These loans are very attractive to military veterans because of their repayment terms and low-interest rates. SBA Veteran Loan rates are currently set at 4%. These loans provide the working capital needed to pay necessary expenses; funds cannot be used for income or profit loss, refinancing debt, or business expansion.
How To Qualify For A MREIDL
The Military Reservist Economic Injury Disaster Loan Program is available to service members, reservists, or National Guard members on active duty.
To qualify, service members must apply for the loan while on active duty or for a period of one year following the end of active service or discharge.
How To Apply For A MREIDL
Contact the Disaster Assistance Customer Service Center via phone or email to obtain an application for the Military Reservist Economic Injury Disaster Loan Program.
Which SBA Loan Is Right For Your Veteran-Owned Business?
Generally, the following is true:
- A Veterans Advantage Loan is best for veteran business owners who are no longer active in the military or are transitioning out of active duty. Military spouses who own a business are also eligible.
- A Military Reservist Economic Injury Disaster Loan is best for service members who own a business but have been called up to active duty, and their business is suffering as a result.
Neither of these SBA loans for veterans right for your small business? If you’re a credit union member, this might be a good place to start applying for loans. A bill called the Veteran Member Business Loan Act was recently introduced to the Senate, which would exempt loans made to veteran-owned businesses from the member business lending cap (currently 12.25%). If passed, this law will hopefully result in more credit union loans to veterans in the coming years.