The best small business loans for veterans offer financing opportunities for military service members who own a business. They also extend credit and other business development resources to those who have served. Since there aren’t lending programs specific to VA small business loans, most small business loan options are accessible to businesses of all backgrounds.
In this article, we’ve compiled a list of some of the best small business loans available to veterans.
- Grasshopper Bank (SBA 7(a) Loan): Best overall for favorable loan rates and terms
- Grasshopper Bank (SBA Express Loan): Best for veterans needing a quick lending decision
- Navy Federal Credit Union: Best for veterans with various banking needs
- Accion Opportunity Fund: Best for DEI-oriented business owners
- Bank of America: Best for veterans with a strong credit score and history
- National Funding: Best for short-term financing needs
- Lendio: Best for veteran business owners with bad credit
- SBG Funding: Best for veterans needing quick access to capital
SBA 7(a) Loan: Best Overall for Favorable Rates & Terms
Why We Like SBA 7(a) Loans
SBA 7(a) loans are extended by designated private lenders appointed by the SBA. They offer government-backed loans that provide US-based for-profit businesses with favorable rates and terms compared to loans offered by other lending institutions.
You can get an SBA small business loan through our recommended provider, Grasshopper Bank. It’s a great funding resource for veteran small business owners who qualify and can take advantage of higher loan amounts, lower interest rates, and longer repayment terms. Loan proceeds are flexible and applicable to a wide variety of business expenses, including inventory and equipment, purchase of real estate, and general working capital needs.
Qualifying criteria are typically more strict due to their government-backed nature and vary depending on the participating lender. Also, these loans generally require a personal guarantee and other collateral to secure the loan. That said, approval and disbursement can be a lengthier process than other lenders, so it’s best to keep that in mind when applying.
You’ll likely need a business plan to get approved for an SBA loan. See our guide on how to write an SBA business plan, which includes a free downloadable template you can customize.
SBA Express Loan: Best for Veterans Needing a Quick Lending Decision
Why We Like SBA Express Loans
SBA Express loans are a type of 7(a) loan but come with a more streamlined process. They are provided by participating qualified lenders, such as Grasshopper Bank, and offer favorable rates and terms. However, they have lower loan amounts and guarantee percentages. Generally, these are best suited for borrowers who don’t qualify for traditional 7(a) loans or seek a quicker disbursement timeline—since the program usually offers decisions in 36 hours or less.
While loan offerings are generalized to all qualifying small businesses and not just veterans, veteran-owned businesses can utilize these loans to support their businesses financially. Borrowers will need to have a strong credit history since the loans are government-backed and generally have more rigorous qualification and documentation requirements in comparison to other lenders.
These loans provide quick access to working capital that can be used to support various business expenses. They are backed by a 50% government guarantee and have various rates and terms depending on the loan type. To qualify, you must be a for-profit small business based in the US and meet individual lender requirements. Notably, if you own more than 20% of the business, you will be required to offer a personal guarantee.
Navy Federal Credit Union: Best for Veterans With Various Banking Needs
Why We Like Navy Federal Credit Union
Navy Federal Credit Union is a lending institution that specializes in financing options for military service members, including veterans and their family members. You’ll need to be a member of the credit union to partake in its various banking services. Like Bank of America, it offers both personal and business banking services, which is useful if you’re looking to keep your finances in one place.
It offers various loan types, which can be used to purchase commercial real estate, obtain a business line of credit, or get term loans for working capital purposes. While qualification requirements are generally undisclosed on its website, there are a few general guidelines to consider. This includes collateral requirements, down payments, and fees where applicable.
As a credit union, it offers favorable rates and terms for small business loans, although you’ll have to consult the institution for more information pertaining to discounts and current interest rates. Once you’re a member, you can submit a loan application online.
Accion Opportunity Fund: Best for DEI-oriented Business Owners
Why We Like Accion Opportunity Fund
The Accion Opportunity Fund differs from most lending institutions included in this guide in that it operates as a non-profit. More specifically, it strives to provide funding opportunities to groups that otherwise may be overlooked, such as minorities, women, and veterans. As part of its non-profit lending model, loan repayment proceeds are utilized to invest in other small businesses.
What also sets it apart is its loan structure; it tailors each loan in consideration of a variety of factors—focusing more on cash flow and earning potential rather than just credit score or time in business. In addition to financing opportunities, it offers educational and business development resources to help business owners continue to grow and achieve their goals.
You can get a quote online with no impact on your credit score—you’ll just need to provide information on business revenue and expenses. The application process is simple and, if approved, you’ll be provided with a variety of offers for your ideal repayment schedule and interest rate. If it can’t extend an offer, it provides other resources and can direct you to another partner lender.
Bank of America: Best for Veterans With a Strong Credit Score & History
Why We Like Bank of America
While not specific to veteran-owned businesses, Bank of America offers small business loans that can provide financing opportunities for businesses industry-wide. However, it offers a 25% discount on loan administration or origination fees for veterans applying for a new credit facility for their small businesses.
It also has competitive rates and is a suitable option for established businesses with a strong credit history. It offers both secured and unsecured business term loans and is an option for veteran-owned small businesses looking to obtain working capital and fund various business endeavors.
You may have to provide a personal guarantee depending on the loan type and meet higher qualification standards in comparison to other lenders in this guide. The application process can be lengthy, so if you’re looking for same-day disbursements (provided by lenders like SBG Funding), you may want to consider that before applying.
Notably, Bank of America is also a designated SBA loan provider, should you choose to go that route. Also, a perk unique to this guide is its rewards program offerings, which can provide discounts and perks to members who have a Bank of America business checking account and can meet monthly deposit account balance requirements.
National Funding: Best for Veterans With Short-term Financing Needs
Why We Like National Funding
National Funding has experience supporting veteran business owners and offers various financing opportunities for their businesses. Its working capital loans have shorter repayment terms compared to term loans from traditional institutions like Bank of America or Navy Federal Credit Union.
So, if you’re an established business with short-term financing needs, this is a great option for quick access to working capital. Depending on your desired loan term, there are repayment periods anywhere from 4 to 18 months.
Loan proceeds are disbursed quickly upon approval and can be used to pay vendor invoices, cover emergency costs, purchase equipment, and finance a variety of other business expenses. National Funding also utilizes a factor rate, which is something to keep in mind when shopping around for loan terms. Notably, there’s no prepayment penalty attached to the provider’s small business loan. Rather, it offers an early repayment discount, which isn’t offered by other lenders on our list.
While there are no specific loan benefit offerings to veteran business owners, National Funding has experience working with veterans and offers additional business development resources. You can discuss all of your loan options by working with its designated funding specialists and applying online.
Lendio: Best for Veterans With Bad Credit
Why We Like Lendio
Lendio is unique on this list in that instead of offering its own lending products, it connects potential borrowers with various lending partners that can provide business financing opportunities. It caters to a wide variety of business owners and can present several loan options with one simple application.
With many partner lenders, there’s a better chance of approval depending on the qualification standards of the lender. This allows business owners with bad or limited credit histories the opportunity to shop around in one place and source financing for their business needs.
Eligibility criteria vary per lender; however, loans are generally attainable and offer differing terms and repayment options. Lendio utilizes funding specialists for each application to help borrowers understand the pros and cons of each lending option. This benefits businesses that are weighing their options; they can use the funding specialist as a resource to ensure the best fit for their business.
SBG Funding: Best for Veterans Needing Quick Access to Capital
Why We Like SBG Funding
SBG Funding is one of our top-recommended working capital loan providers. Among other lending options, it offers customized small business term loans that present a variety of financing opportunities to businesses industry-wide. Notably, it offers up to a $500 rebate in loan interest for veterans.
If you need quick access to capital, SBG Funding offers a streamlined application and approval process that requires little time and documentation. If approved, you can receive funds within the same business day. Loan proceeds can be used for a variety of business needs, including cash flow shortages, expansion, inventory, and access to emergency funds.
The loans are best suited for established businesses needing long-term financing with favorable rates and terms. However, the lender does review applications on a case-by-case basis, so it considers businesses with limited history if it has the resources.
SBG Funding is a great resource for sourcing financing for your business and has a simple online application that provides you with quick lending decisions and disbursements. Various qualification requirements depend on the loan details.
How We Evaluated the Best Small Business Loans for Veterans
We evaluated the small business loan providers for veterans based on a few key factors:
- Qualification criteria per lender
- Rates and terms of various loan options
- Maximum loan amounts available
- Benefits and resources provided to veterans
- Ease of application process
- Approval and disbursement timeline
Additional Resources for Veteran-owned Businesses
There are several resources to assist veterans with further financing opportunities. These include various initiatives that involve training programs, federal contracting programs, and other funding resources.
PenFed Foundation
The PenFed Foundation provides financial assistance via its Veteran Entrepreneur Investment Program, which allows scalable veteran-owned businesses the opportunity to offer equity stakes in their business in exchange for funding. Investors have the option to keep their ownership percentage or cash out their shares via a convertible note. Financing options are decided by the PenFed investment committee and are based on a presentation and business plan.
Learn more about the PenFed Foundation
Hivers & Strivers
Hivers & Strivers is an angel investment group that aims to support veteran-owned businesses. It provides angel funding in exchange for equity stakes and offers business guidance to help ensure a return on investment. To qualify, you must be a veteran-owned business with high potential and provide a business plan outlining your structure and growth projections.
Learn more about Hivers & Strivers
SBA Resources
- Military Reservist Economic Impact Disaster Loan (MREIDL): Eligible businesses can apply for this SBA loan if their business staffing has been impacted due to military service requirements. It provides up to $2 million in loan proceeds and can be used to cover operating expenses. Read our article about SBA disaster loans to learn more.
- Veteran Business Outreach Center (VBOC) Program: This program offers various resources to veterans, service members, and military spouses interested in starting or growing a small business. Such resources include business training, workshops, networks, counseling, and local mentorship opportunities.
- Boots to Business (B2B) Program: The B2B program is offered by the SBA and aims to provide educational and training opportunities pertaining to business ownership for potential military service entrepreneurs.
- Women Veteran Entrepreneurship Training Program (WVETP): This is considered a grant opportunity that provides educational and business development resources to women service members, spouses of service members, and veterans.
- Service-Disabled Veteran Entrepreneurship Program (SDVTEP): For veterans who were injured in the line of duty, SDVETP aims to provide funding opportunities to current veteran-owned businesses, or assistance to those who are potential business owners.
- Veteran Federal Procurement Entrepreneurship Training Program (VFPETP): VFPETP offers federal procurement training for currently involved or interested veteran-owned or service-disabled businesses.
The SBA’s Lender Match tool helps match you with a lender that fits your criteria and can provide details pertinent to your financing needs.
Alternatives to Small Business Loans for Veterans
There are quite a few financing alternatives for veterans looking to get a small business loan.
- Startup business loans: Startup business loans are available to a wide variety of businesses with limited history and resources that need financing to get their businesses up and running. It’s best for those looking to finance long-term expenses that can be repaid with monthly installments for the term of the loan.
- Business credit cards: For flexible business expenses, you can use a business credit card to make purchases and pay off the balance over time. This is an option for business owners who have short-term expenses and can take advantage of flexible repayment terms. For options, see our top-recommended small business credit cards.
- Business line of credit: Similar to a credit card, a business line of credit acts as a revolving credit facility in which the user can request draws and then finance various expenses. The balance is expected to be repaid over time, and the funds can be drawn on an as-needed basis. Our roundup of the best small business lines of credit is a good place to start your search for a provider.
- Personal loans: If you’re ineligible for a small business loan, you can utilize personal loans to fund your business. This is an ideal option for businesses with bad or limited credit history since a personal loan is granted based on personal financials. To learn more, check out our guide on putting personal money into a business.
Frequently Asked Questions (FAQs)
Generally, a business must be 51% owned by someone who is an active duty military service member or a spouse of a military service member. However, specific ownership qualifications will vary by lender.
A credit score of 600 and above is recommended to be considered eligible for various business loans. However, requirements will vary per lender.
Yes. Depending on the lender, there may be discounts on certain fees. At this time, there are no VA small business loan offerings specific to benefits or discounted rates.
Bottom Line
The best business loans for veterans offer favorable rates and terms and can provide financial support to the operations of a business. Generally, loans offered apply to any small business; however, in consideration of the best loan offerings for veterans, they should also come with education or developmental resources specific to service members to help aid their business endeavors and set them up for success.
