Are you a veteran in need of a loan to start a business? If YES, here are 7 best sources of small business loans for veterans with bad personal credit and how to get it.
If there is any country that comes tops when it comes to taking care of her veterans, then it is the United States of America. As a veteran in the United States of America, there are loads of support that are available to you and one of them is getting small business loan if indeed you want to start and run your own business after retirement.
As a matter of fact, there are loads of veterans who have gone ahead to establish successful businesses in the United States of America and Col Sanders, the founder of Kentucky Fried Chicken (KFC) readily comes to mind. So as a veteran in the United States, you can equally start a business that can become a global brand with the many loans that are available to veterans.
Just ensure that you have a good business idea, a business plan and perhaps good credit ratings and you are good to access all the small business loans that are available to veterans in the United States of America. Here are some of the small business loans available to veterans in the United States.
7 Sources of Small Business Loans for Veterans With Bad Credit
- SBA Express Loans
If you are a veteran in the United States, then the Small Business Administration (SBA) Express Loan program is your best bet when it comes to getting loans for your business.
The US Small Business Administration Express Loan program does not make available direct loans to veterans who are interested in starting their own businesses or small enterprises but rather, the SBA Express Loan program sets the guidelines for loans, which are then made by its partners (lenders, community development organizations, and micro-lending institutions).
The Small Business Administration (SBA) Express Loan program guarantees that these loans will be repaid by the borrowers, hence eliminating some of the risk to the lending partners.
This is how SBA Express Loan programs work; when a veteran or enterprise applies for an SBA Express loan, it is actually applying for a commercial loan structured according to SBA Express Loan program requirements with an SBA guaranty. SBA-guaranteed loans may not be made to a veteran or a small enterprise if the business owner has the collateral cum requirements to access other loan opportunities.
SBA loan guaranty requirements and practices can change as the government alters its fiscal policy and priorities to meet current economic conditions. Hence, you can’t rely on past policies when seeking assistance in today’s market.
The truth is that the SBA Express Loan program can guarantee as much as 85 percent of the loan proceeds, so while the lending institution will have some risk, it may not take on more risk than with conventional loans. One of the good things about SBA Express loans is that a veteran or an enterprise can access loans as large as $5 million and most SBA loans are through banks.
You can ask your bank whether it makes SBA-guaranteed loans, or you can go to the SBA website for a list of participating lenders. So also, the SBA has a micro – loan guarantee program for loans up to $50,000. These loans are provided through non – profit community-based organizations.
2. Nonprofit Organizations
Another means of accessing loan as a veteran who has served the United States is through nonprofit organizations who are all out to empower and equip veterans to run their business. The truth is that if you go through the internet, you will come across a host of nonprofit organizations that are giving out loans to veterans or who would give you the needed support that can help you access loans from lenders.
These are some of the nonprofit organizations that you can access loan from if you are a veteran in the United States;
- SBA Service-Disabled Veteran Owned Businesses Contracting Program – If you are a service-disabled veteran, your business can get preferential access to do business as a government contractor.
- UPS Store Franchise Fee Discount – Veterans who want to start a UPS Store franchise business will receive a $10,000 discount on the UPS Store franchise fee, as well as a 50% discount on the initial application fee.
- Veteran Entrepreneur Portal – A partnership of the VA and BusinessUSA, this website connects veterans with entrepreneurship best practices, information, and resources.
- Veteran Business Services – This organization provides consulting for veterans who are interested in purchasing a franchise business.
Now let us consider some other options that a veteran who is serious about starting a business in the United States of America should consider.
StreetShares have proven over time to be of great support to veterans who are serious about starting their business but don’t have the startup capital. The fact that the organization was founded by veterans speaks for itself. They market extensively and provide resources for veteran borrowers, and they have veterans in their network of peer-to-peer investors that fund the loans.
Please note that veterans do not get any preferential treatments such as special deals or discounts on the loan products that they get from StreetShares. In its place, your loan is evaluated based on your creditworthiness like all other entrepreneurs who want to loan money for their business.
If you are a veteran with strong revenue and credit score of at least 600 and you need a loan facility of less than $100,000 to fund your business, then StreetShare should be your best option.
Another organization that is all out to help veterans start and run their businesses is OnDeck. This organization has two types of business loans: Lines of Credit (for more established businesses) with APRs ranging from 13.99 percent to 39.99 percent, and Term loans for newer businesses that need smaller loan amounts.
On the Term loans, instead of charging interest rates, OnDeck charges a fixed amount for every dollar borrowed, which comes out to a higher APR of up to 39.99 percent. OnDeck also charges a one-time origination fee of 2.5-4 percent ($250 per $10,000 borrowed). Please note that OnDeck issues loans of as little as $5,000 and up to $500,000 and can release funds quickly, in as little as a few days or sometimes 24 hours.
On their website, it is clearly stated that OnDeck’s payment terms go from 3 to 36 months, and you are required to repay your loan via automatic daily or weekly repayments. The structure of the OnDeck loan is a bit different from a standard term loan because OnDeck requires borrowers to repay a certain fixed amount of fees, and there is really no advantage to paying off your OnDeck loan early.
OnDeck borrowers must have been in business for a minimum of 1 year, with a credit score of at least 500, and minimum annual revenue of $100,000.
If you are looking for an organization that gives out personal loans to veterans, then you should consider Prosper. These loans are not “business loans” per se; they are personal loans. A veteran who wants to run his or her business can access this loan and use it for the business – there is no hard and fast rule about it as long as you have what it takes to pay back the loan as at when due.
Please note that you must have good credit rating of over 640, and the maximum amount you can access from Prosper is $35,000 and the funding release turnaround time is not as fast as most lenders: it might take up to 2 weeks before you will receive the cash from your Prosper loan.
6. Lending Club
Another organization for veterans who are looking towards getting money to start their business is Lending Club. Lending Club is a credit marketplace or “peer-to-peer lender” that links veterans (borrowers) with investors who fund the loans.
Lending Club wants its small business loan borrowers to have been at least 2 years in business, have at least $50,000 in annual revenue, and at least 20 percent ownership of the business, and no recent bankruptcies or tax liens. A veteran can successfully access the loan to the tune of $300,000 to inject into their business even if they have lower credit ratings.
Kabbage is yet another veteran friendly small business loan granting organization. As a matter of fact, this organization is one of the fastest and most flexible lenders for small business owners with lower credit scores in the United States of America.
Instead of evaluating you on just your credit score, they look at alternative sources of data on your creditworthiness, such as online sales and shipping data. In order to access this loan as a veteran, you should have good credit (greater than 600) or for people who need to borrow larger loan amounts (greater than $150,000). If your business is an online retail shop, an Amazon store, or other businesses that make sales online, and you have less established credit, Kabbage might be the right choice for you.
From their website, Kabbage requires borrowers to have been at least one year in business and have a minimum of $50,000 in annual revenues. Kabbage offers small business lines of credit, where you get approved for a certain amount upfront, and then you can borrow as much or as little as you want (up to that credit limit) at any time.
Please not that you would have to repay loans obtained from Kabbage within 6 or 12 months, including a percentage fee each month. The fact that they don’t charge prepayment penalties gives you the opportunity to save money if you pay your loan off early.
Please note that as a veteran who wants to start a business, the best small business loan for you is the one you are qualified for, the one with the lowest interest rate and most favorable lending terms and conditions. If you can’t get financing for your business through a traditional bank or credit union, the platform lenders stated above is just a way to go.
There you have it, some of the small business loans for veterans in the United States and how the loans can be accessed.