Small business ownership seems to come naturally to military veterans due to their strong leadership skills. Unfortunately, securing the funding to launch a new business can be more challenging for veterans than it is for other civilians. Compared to non-veterans, they submit more loan applications and receive smaller loans when a lender finally approves an application. We explore some of the reasons for the disparity in financing for veteran-owned businesses below.
Borrowing Factors That Work Against Veterans
As new small business owners, veterans typically apply for loans under $100,000. Even though banks have strict criteria for business lending, many prefer to loan larger amounts to earn more revenue from interest. Another challenge for veterans is that the frequent moves required by the military can make it impossible to establish a stable credit history.
A large part of the problem is that former service members simply don’t understand all the small business financing options available to them. They typically start by applying for a bank loan and can become discouraged with how long the process takes and their slim chance for approval. Numerous veteran-specific programs exist, but it’s just a matter of locating and applying to them. For example, the PenFed Foundation donated one million dollars in 2018 to provide seed money to former military members to start their own business.
Yet another issue facing veterans is that owning and operating a small business is new to them and they don’t understand the need to build their own capital first. Building a new business too quickly and taking on too many expenses before the company becomes profitable is a common mistake as well.
Learn More About Small Business Financing Options for Veterans
Our finance company appreciates veterans and want to help in any way we can. Please schedule an appointment today to discuss the many possible small business funding options available to you.