The Best Loans and Resources for Veteran Entrepreneurs

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It’s not easy for soldiers to leave the battlefield and transition back to civilian life. Many veterans struggle with finding a job where they feel satisfied. Returning to a conventional job can feel challenging: it’s one thing to follow orders to protect the freedom of the nation; it’s another to be told what to do by a manager. Instead, many veterans decide to pursue entrepreneurship to become their own bosses.

Veterans play a vital role in the economic stability of the private sector. In fact, millions of businesses in the U.S. are veteran-owned. However, like other small business owners, as a veteran, you may struggle with the same challenges that come with launching and running a business.

According to the Coalition for Veteran-Owned Business, nearly 25% of veterans want to start a business; however, a mere 6% actually go through with it. Why? Because the reality is that veterans don’t have enough access to financing and the resources to help them acquire the capital and training they need to start a business successfully. Sadly for the veterans who start their businesses with personal and family savings, it’s often not enough.

Fortunately, there are loans designed specifically for veterans through the Small Business Administration (SBA). There are also other small business loan options for veteran entrepreneurs that are ideal for start-ups, fast cash, working capital, and financing for expansion.

Here are some of the best loans and financing opportunities available for veterans:

1. Small Business Administration (SBA) loans

The SBA offers several small business financing options reserved for veterans. Here are two examples of veterans-only loans:

  • Military Reservist Economic Injury Disaster Loan (MREIDL): The MREIDL is available to military reservists whose business’s financial goals were unmet because an essential employee was called up to active duty. The loan is a temporary source of financing to cover operating expenses until the reservist is discharged.
  • SBA Veterans Advantage Program: The VA loan typically has lower rates and fees compared to traditional loans. Under the SBA veterans advantage program, businesses can get up to $150,000 with no upfront fees.

Most members of the regular military, National Guard, reservists, and veterans are eligible to apply for a VA loan. Specifically, to qualify for a VA business loan, the business must be 51% owned and controlled by one of the following:

  • An honorably discharged veteran
  • A service-disabled veteran
  • An active-duty military member participating in the military Transition Assistance Program
  • A reservist or member of the National Guard
  • A spouse of any of the above
  • A widowed spouse of a service member who died in the line of duty or from injuries sustained as a result of their service

2. Veteran-specific financial groups

Veteran-specific financial groups aim to make it easier for military members to obtain the funds they need to grow their businesses. Here are some examples:

  • Hivers and Strivers: Hivers and Strivers is an angel funding firm that funds early-stage companies founded by graduates of the U.S. Military Academy, Naval Academy, Air Force Academy, Coast Guard Academy, or Merchant Marine Academy.
  • The Streetshares Foundation: In addition to short-term loans, the foundation offers monthly grants and loans for veteran-owned businesses (or ones run by their spouses), prioritizing businesses based on their social impact and the strength of their business idea.
  • Bunker Labs: Bunker Labs is a nonprofit organization that provides access to a national network of veteran and milspouse entrepreneurs dedicated to helping veterans and others in their transitioning military community start their own business.

3. Traditional banking institutions

Traditional financial institutions are options for veterans who have solid credit scores. Unfortunately, over the last several years, banks have signed off on fewer and fewer business loans. In fact, banks only approved 25.3% of the small business loans that came their way in 2018.

4. Crowdfunding

Crowdfunding platforms such as Kickstarter, Indiegogo, and AngelList are some of the best crowdfunding sites for small businesses. This option is ideal for veteran entrepreneurs who are building products or creating services. Crowdfunding connects entrepreneurs to donors and investors who believe in the veteran’s project or business idea.

Considering crowdfunding? Here are 5 pros and cons of crowdfunding your business.

5. Invoice factoring and invoice financing

Does your business have a lot of unpaid invoices? With invoice factoring, you can sell them at a discount, giving your fast cash and saving you the time you’d spend tracking down your clients to pay up. With this option, you forgo a chunk of your revenues since the invoice factoring company owns your invoices and therefore, collects payments directly from your customers.

If you’re interested in getting some funds from your accounts receivable, but you would rather maintain control of your relationship with those customers, check out a similar option, called invoice financing.

Learn about how invoice factoring and invoice financing differ and what they can offer.

6. Business lines of credit

Unlike other forms of financing, you don’t have to pay interest on the full sum you borrow when you secure a business line of credit. Instead, you pay interest only on the portion of the credit you actually use.

The process for applying and getting a line of credit varies depending on which firm you work with, but the internet and AI technology have combined to dramatically speed it up in recent years. With alternative lenders like Fundbox that offer business lines of credit, you can secure credit limits of up to $100,000 that you can repay over 12 or 24 weeks via auto debit. With Fundbox, you can apply online without any paperwork to get started, and can expect a credit decision in as little as 3 minutes.

Want to learn more about lines of credit for your business? Check out our guide to small business lines of credit.

Education and training for  veteran entrepreneurs

There are also amazing organizations and programs that aim to educate and train veterans to become entrepreneurs:

  • Institute for Veterans and Military Families (IVMF): The Syracuse University provides education and training for entrepreneurial veterans. Part of the program aims to educate veterans on how to access capital and finance their business.
  • Boots to Business: The U.S. Small Business Administration offers a free 2-step education and training program to service active-duty military members transitioning out of the military and their partners or spouses who want to become entrepreneurs.
  • Patriot Boot Camp:  Patriot Boot Camp is a non-profit boot camp offered to active duty service members, veterans, and their partners or spouses. During the 3-day program, they are educated and trained on the fundamentals of starting a business by mentors.

Learn more about funding for veterans

There are a ton of resources out there for veterans besides what we’ve covered in this article. If you’re interested in learning more, check out our guide to small business loans for veterans to get even more ideas about where to find the financing you need, when you need it.

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