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Everything You Need To Know About The Best Business Loans For Veterans – Forbes Advisor

Everything You Need To Know About The Best Business Loans For Veterans – Forbes Advisor
Written by Publishing Team

Traditional financial institutions such as banks and credit unions may offer small business loans as well as financial products aimed at veterans. However, companies owned by eligible veterans can also borrow money from a number of other sources.

Online Loans

Online business loans are a common source of funds for businesses, including those owned by veterans. Loans often come with less stringent qualification requirements than the financing offered by traditional commercial lenders and may offer more flexible loan amounts and repayment terms. Many online lenders also offer a variety of financial products, including equipment financing and bill discounting, in addition to standard term loans and lines of credit.

However, keep in mind that these more accessible loans usually have higher annual percentage rates (APRs) than their traditional counterparts. This makes it more expensive – especially for business owners who do not qualify for the most competitive rates.

SBA Veterans Program

SBA’s Veterans Advantage program reduces security fees for certain types of SBA 7(a) loans that go to small, veteran-owned businesses. The program was originally initiated by the Obama administration in 2014 to offer a fee waiver under the SBA Express program, and after it expired in 2015, it was replaced by the current savings structure. Under the program, a fee waiver is available for small businesses owned and controlled by at least 51% of the following businesses:

  • Honorably discharged veterans
  • Disabled Veterans Service
  • An active duty military member eligible for the Army’s Transitional Assistance Program (TAP)
  • Reserve soldiers and/or active National Guard personnel
  • The current spouse of any veteran, active-duty member, reserve, National Guard member, or widowed spouse of a service member who died while serving or as a result of a service-related disability

SBA Express Loan

SBA Express loans are part of the 7(a) Loan Program and offer eligible business owners up to $500,000. The funds can be accessed as a line of credit or a lump-sum loan, and the SBA waives guarantee fees for companies owned and controlled (51% ownership or more) by veterans, some active duty military, and other eligible applicants based on military service and their spouses.

Up to 50% of the loan funds are guaranteed by the SBA, and although interest rates are private to the lender, they may not exceed the maximum SBA charges (5% or 6%, depending on the loan amount). However, what is most noticeable is the response time – potential borrowers can expect a response to their request within 36 hours.

Economic Injury Disaster Loan for Military Reserves

The Military Reserve Economic Injury Disaster Loan (MREIDL) program is for companies whose primary employee is a military reserve soldier who has been called into active duty. Loans are available up to $2 million and come at 4% interest. Repayment terms extend up to 30 years, with no penalty or prepayment fees.

While MREIDL is a flexible borrowing option for eligible businesses, collateral — something of value backing the loan — is required for loans larger than $50,000. The money can only be used for normal and necessary operating expenses – not to cover lost income or lost profits. Furthermore, MREIDL loan funds may not be used for business expansion, and are not available in place of regular business debt or to refinance other debt.

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