Military veterans own almost 2 million businesses in the United States and employ over 5 million Americans. Data from SCORE also shows that veterans contribute to entrepreneurship at a higher rate than non-veterans.
However, many veterans worry about getting the financial backing they need to launch and grow their ventures. Veteran entrepreneurs often tap into their personal savings and apply for business credit cards at a higher rate than non-veterans.
There are other funding options available to veteran business owners who may not be in a position to use their own resources. These grants, loans, and funding options are specifically offered to merchants with military experience.
Small Business Administration loans
The Department of Veterans Affairs (VA) is where you might expect to find government funding for veteran-owned businesses. But actually, the VA doesn’t offer business loans; instead, the Small Business Administration (SBA) has loans earmarked for veterans. These types of loans require specific forms — such as Form DD 214 — in addition to typical application files such as your business plan, tax information, financial statements, and other business documents.
Here are a few of the main SBA funding opportunities directed to military members:
- The Military Reservist Economic Injury Disaster Loan Program (MREIDL) helps small businesses cover operating expenses up to $2 million if an “essential employee” is called to active duty in the Reserves or National Guard. The interest rate on these loans is 4%, with a loan amount limit of $2 million and loan term max of 30 years.
- The SBA Express Loan Program offers up to $500,000 in loans with upfront guarantees (typically 2% to 3% of the loan) waived for veterans, reservists, National Guard members, and spouses who qualify.
The SBA 7A Loan Program is also a good option for veterans; while it’s not specifically targeted toward military members, these loans are a good option for established businesses looking for long-term financing — with larger loan amounts than the Express program offers (up to $5 million).
If you have a service-related disability, you may qualify to be certified under the SBA’s Veteran Small Business Certification (VetCert) program.
Veteran entrepreneurs often tap into their personal savings and apply for business credit cards at a higher rate than non-veterans.
“Certification with SBA allows service-disabled veteran-owned small businesses (SDVOSBs) to compete for federal sole-source and set-aside contracts across the federal government. Certified veteran-owned small businesses (VOSBs) have additional opportunities to pursue sole-source and set-aside contracts at the U.S. Department of Veterans Affairs (VA) under the VA’s Vets First program,” wrote the SBA.
Many SBA loans are also available to military spouses and widows. Note that there are other forms that may be required to verify your eligibility for some of these loans.
[Read more: Everything You Need to Know About Veteran Entrepreneurship]
Other loans, grants, and financial resources
Apart from government funding, there are many private and nonprofit organizations that support small business merchants who’ve served (and including active service members).
- The Second Service Foundation hosts the Military Entrepreneur Challenge, awarding $15,000 to the winning business pitch—as well as funding for the runner-up and third-place finishers.
- Michigan Veteran Entrepreneur-Lab is a three-month accelerator for veterans with a business idea. In addition to resources and coaching, the program concludes with a business pitch competition to win at least $20,000 in prize money.
- Texas Woman’s University offers the Veteran Woman Entrepreneur Grant program: twenty-five grant funds of $5,000 each, awarded to qualified Texas women veterans.
- Hivers and Strivers Capital is an angel investment fund that offers financing to startups founded and run by graduates of the U.S. Military Academies.
- VetFran provides a database of franchise opportunities specifically for veterans, with more than 600 companies offering the chance to buy into an established enterprise. Companies that list with VetFran often provide discounts and other assistance to veterans looking to buy a franchise.
There are more grant and funding opportunities announced each year. Make sure you meet the qualifications before dedicating time to completing any loan or grant application.
[Read more: 6 Veteran-Owned Business Directories You Can Join]
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