Business Financing Options for Veterans

Veterans own 2.5 million businesses in the United States, generating $1.3 trillion in revenue. Approximately 6% of all employer firm revenue comes from these businesses. Despite contributing to the national economy, financial obstacles have caused a steady decline in veteran business ownership.

Veteran entrepreneur funding can eliminate existing financial tensions, enabling retired servicemen to overcome monetary constraints and ensure business success.

Understanding the Need for Veteran-owned Business Loans

Veterans have a long-standing history of venturing into business and becoming entrepreneurs. According to historical data, 49.7% of World War II veterans and 40% of Korean War heroes became entrepreneurs after retiring from the service.

However, circumstances have changed.

Only 4.5% of post-9/11 veterans own businesses in the US despite 26% having a keen interest in becoming entrepreneurs. This situation is also similar in Canada.

Financial constraint continues to be one of the key contributing factors affecting this decline in business ownership among veterans.

Veteran-owned businesses find it challenging to secure loans from traditional financing institutions like banks because they lack credit history. Such businesses may not have enough years in the business or collateral against which they can apply for loans.

Even though many financing institutions offer business loans for veterans, the process is time and effort intensive. Veterans in need of immediate funds may experience delays in scaling their businesses because of the complex approval process. They may have to pay higher interest rates compared to non-veterans to secure loans.

These complications underscore the need for veteran business support programs.

Military business loans that prioritize fund allocation to ex-servicemen and accommodate their unique needs are the best option.

Best Financing Options for Veteran Entrepreneurs

Veterans can access a plethora of resources to fund their entrepreneurial journey. These include:

1. Government-Backed Loan Programs

The U.S. Small Business Association (SBA) offers $500 to $5.5 million in working capital and fixed-asset loans to SMBs. Veterans can utilize SBA resources like Lender Match to find an ideal match for financing their business. The approval terms and conditions vary based on the unique requirements of the business, but SBA bridges the accessibility gap between veterans and lenders.

SBA also provides access to federal contracting opportunities, training programs, and Veterans Business Outreach Centers (VBOCs) all over the country to help veterans in their entrepreneurial journey.

Veterans Affairs Canada (VAC) offers $42,000 to over $80,000 in financial aid to its retired servicemen turned entrepreneurs. The loan amount is dependent on years in service. Veterans can also benefit from VAC’s training programs and business boot camps.

2. Grants and Funding Opportunities

The U.S. and Canadian Governments, non-profits, and similar institutions offer the following grants and funding opportunities to veterans:

1. Military Entrepreneur Challenge: Hosted by The Second Service Foundation, this competition awards up to $15,000 to veteran business owners, military spouses, and Gold Star family entrepreneurs if they submit the winning pitch.
2. Veteran Woman Entrepreneur Grant: The Texas Woman’s University offers $5000 grants to aspiring veteran woman entrepreneurs to start and fund their businesses. Twenty-five such grants are offered every year.
3. Stephen L. Tadlock Veteran Grant: Founders First offers $1,000 in rewards to 25 veteran-owned businesses and provides access to resources for business success.
4. FedEx Entrepreneur Fund: FedEx, in association with Hello Alice and the Global Entrepreneurship Network, offers $300,000 in grants to 30 entrepreneurs who are connected to the military or disabled.
5. Southern California Job Creators Grant: Founders First CDC offers $100,000 in minority veteran business grants to military business owners residing in Los Angeles, Orange, Riverside, Imperial, San Bernardino, or San Diego.
6. Michigan Veteran Entrepreneur Lab Pitch Challenge: The Grand Valley State University hosts a business pitch challenge for veterans with financial rewards for winners.
7. Inclusive Workplace and Supply Council of Canada: The IWSCC offers training and mentoring programs for veterans and connects them with multi-million dollar financers.

Business owners can browse various government and non-government veteran small business grants on grants.gov for free. The eligibility requirements for these minority business loans and funding are unique to each program.

3. Private Loans

At Greenbox Capital, we offer quick and hassle-free private funding for veteran-owned businesses in less than 24 hours. Any business that’s part of the Vets First Verification Program under Veteran-Owned Small Business (VOSB) can get loans ranging from $3,000 up to $500,000.

We offer:

1. Merchant Cash Advances (MCAs) for working capital that can be repaid as a percentage of future credit or debit sales.
2. Business Line of Credit for Veterans where they can borrow as much as needed from a pre-approved fund and pay interest only on the borrowed amount. Business Line of Credit is a flexible solution that does not have the limitations of a fixed-term loan.
3. Collateral startup business loans for veterans for larger loan amounts at lower interest rates.
4. Invoice Factoring where we pay for pending invoices in cash to help sustain cash flow.

4. Specialized Programs for Service-Disabled and Minority Veterans

There are grants available for service-disabled veteran-owned businesses.

SBA offers service-disabled veteran business loans for additional funding from the 5% federal funding designated for the Service-Disabled Veteran-Owned Small Business Program (SDVOSB) every year.

How to Apply for Veteran Business Loans in the U.S. and Canada

Since eligibility requirements vary depending on the source of funding, navigating the application process for government loans for veteran entrepreneurs can be challenging.

SBA offers loans to businesses where a:

• Veteran
• Service-disabled veteran
• Active Duty Military service member
• Reservists and National Guard member
• Current or widowed spouse of a service person in the above-mentioned categories owns a 51% stake in the business.

Veteran entrepreneurs should acquire the Vets First Verification Program before they apply for small business loans to ensure hassle-free processing. They must also maintain a consistent credit score to increase the chances of approval.

Contrary to traditional programs, our application procedure involves minimal steps and a fast turnaround time. Our dedicated Funding Advisors assist our customers to expedite the process.

Veterans can submit the application form and wait for the call back to avail of their loans.

Resources and Support Services for Veteran Business Owners

SBA offers online and offline courses to ex-servicemen interested in starting their business. There are Veteran Business Outreach Centers (VBOCs) for training, mentorship, workshops, and other support services.

The Canadian government offers holistic programs like Education and Training Benefit (ETB) and Canadian Veterans Vocational Rehabilitation Services to its veterans. These services are not focused on entrepreneurship but provide the impetus veterans need to transition into civilian life and run a business.

Veterans aspiring to be entrepreneurs must utilize the right resources for business success.