If you run a small business and you happen to be a veteran, you are in luck. There are a few providers that specialize in offering business loans to veterans. Most of them will also extend these loans to military widows and spouses who are running a business.
The first step in choosing a loan company is determining what type of loan you’ll need. Your choices are a standard 7(a) loan, MREIDL, and microloans. A 7(a) loan is issued by the Small Business Administration (SBA.) This loan can get you as much as $5 million to spend on your own business. If it is already established, you may qualify for this loan. In general, the money you get from this loan should be spent on real estate and/or working capital. It can be paid back over a matter of months and won’t usually incur high interest rates.
MREIDL stands for Military Reservist Economic Injury Disaster Loan. It is a special loan often granted to business owners who are called back to duty. However, it may also be granted if the military member called into action is an employee of a qualifying small business. Either way, your business can get money from the loan the entire time you or your employee are actively serving. This loan can have a value of as much as $2 million, which you have up to 30 years to pay back.
Microloans are an option the SBA offers to those who don’t qualify for other types of loans. The maximum amount you can get from a microloan is $50,000. It’s also worth noting that the interest rates are higher than the rates other loan types charge. Applying for a microloan requires you to put up collateral, and submit your business plans and tax returns, as well as your financial projections.
Regardless of the type of veteran business loan you apply for, there are some qualifications to meet. Your business must be for-profit, operating in the U.S. and you must have invested equity into it.
For more advice on small business loans for veterans please contact POM Capital and Funding Services.