I’m going to be brutally honest. I was pissed writing this blog post.

These days Veteran’s Day has become synonymous with a free meal at restaurant.

On top of that, I searched high and low for loans exclusively for veterans loans to start a business. However, I didn’t find pages and pages of options.

I even called my mom who is a disabled veteran and she confirmed the options were slim—SBA. It’s true that there are a couple other options, but it’s not much.

I may not be a veteran. However, both of my parents are veterans. Do better, America.

Veterans fought hard for this country so the least you can do is give them more resources to start a business.  In 2021, only 10.7% of new businesses were created by veterans.

While this is a 100% increase from the (5.4%) ownership in 2019, the numbers could be better.

The best way to get these numbers up is to give veterans free money or the next best thing—better loans.

Veteran loans are typically more affordable than traditional loans. Since these loans are specifically designed to help businesses owned by veterans, they offer lower interest rates on the amount borrowed than other types of loans.

SBA 7(a) Loans

SBA 7(a) loans are intended to help small businesses that meet certain credit requirements. Small businesses requesting a loan through the SBA must meet certain requirements that are common to most of the SBA loans.

Some requirements common for SBA loans is that:

• the business is a for-profit business
• the business is physically located in the U.S. or its territories
• the owner or owners of the business invested their own time and money
• the owners aren’t able to get money from another financial institution lender

Under a 7(a) loan, the SBA does not make the loan or hand out any money.

So, the loan is made by a participating lender. However, the SBA does back or guarantee the loan. If the borrower defaults on the loan, the 7(a) lender may ask the SBA to buy the guaranteed portion of the loan.

7(a) Loan Application and Eligibility

The borrower must have invested a reasonable amount of money in their business. Also, the borrower can’t be in default on any amounts owed to the U.S. government.

To apply for a 7(a) loan, the small business borrower must submit a loan application, which includes the appropriate SBA forms.

Usually, the loan application requires the applicant to submit the following information:

• Borrower information form, SBA Form 1919
• Statement of personal history, SBA Form 912
• Personal financial statement, SBA Form 413
• Business financial statements (usually must be statements within the past 180 days)
• List of names and addresses of any subsidiaries, affiliates, and other entities that the borrower controls or that’s affiliated with the borrower
• Copies of any applicable business license(s)
• List any of the borrower’s past loan applications
• Personal resumes of each the of borrowers
• History of the business, e.g., the reason it’s requesting the loan
• Copy of any business lease, if applicable

If the borrower is buying an existing business, the borrower must submit the following information:

• Current balance sheet and profit and loss statement
• Federal income tax returns for the past 3 years
• Terms of the buyer’s agreement, including the price, list of any inventory, machinery, equipment, furniture, and fixtures
• Additional SBA forms that address how the money will be used and disclose any fees that will be paid to any lender, broker, or agent

Veteran’s Advantage Loans

The SBA offers certain programs to help veterans get money to start or grow a business.

For example, the SBA’s 7(a) loan program is similar to the veteran’s advantage loan. However, the veteran’s advantage loan has reduced fees and quicker approval times.

To be eligible for a Veteran’s Advantage Loan, at least 51% of a small business must be owned by a person or people in the following categories:

• Veterans that were honorably discharged
• Military service members that are on active duty
• National Guard members or U.S. military reserve on active duty
• The current spouse of any member that’s active duty, veteran, reserve member, National Guard member, or the widowed spouse of a service member who died in service or because of a disability that happened while they served

Under the Veteran’s Advantage Loan program, veterans who run a small business can borrow up to $5 million for the following reasons:

• to expand or buy a business
• to buy real estate
• to buy equipment
• to get capital (or an investment)
• to refinance debt

Honorable Mention:

Hivers & Strivers is dedicated to only helping veterans. So, Hivers & Strivers will only provide money for businesses that were created by US military veterans. A veteran can receive money that ranges anywhere from $250,000 to $1 million.

Wrapping It Up

I’m not sure why Congress hasn’t changed the GI Bill to allow money to be used for creating new businesses. This change has been requested more than once, but it keeps stalling out.

Don’t let your dreams of starting a business stall out, because of the limited resources. Whether you decide to take out a loan or grant, the world needs more veteran entrepreneurs.

Will you use a grant, loan, or some other source to fund your business?