The 21.8 million veterans in the United States have made remarkable sacrifices in their service and deserve all the appreciation they receive and more. Their time in the military and the skills they’ve developed give them a distinct perspective, which they can use to start amazing businesses. Like any person trying to start their own business, veterans need capital to get things off the ground. Multiple institutions offer grants or financing options with specific benefits for veterans.
Generally, to qualify for veteran grants or financing, you must fall into one of the following categories:
- Honorably Discharged Veterans (some grants may specify a particular conflict or time period, e.g. post-9/11 era)
- Service-Disabled Veterans
- Active Duty Military service member participating in the military’s Transition Assistance Program (TAP)
- Reservists and National Guard Members; or
- Current spouse of any Veteran, Active Duty service member, or any Reservist or National Guard member; or widowed spouse of a service member who died while in service or of a service-connected disability.
If you fall into one or more of the above categories, here are some possible options for you to finance or move your business along.
1. SBA Veterans Advantage 7(a) Loan
The 7(a) loan is the Small Business Association’s primary and most popular program. With longer terms and potentially lower down payments than other financing options, it’s a great option when you’re looking for capital for your small business. Typically, the SBA, or many other lenders, require an upfront guarantee fee. For SBA 7(a) loans made to qualifying Veteran-owned businesses under $125,000, the upfront guarantee fee will be $0.
As the loan amount goes up, the SBA may still require a fee, but at a discounted rate compared to those for non-veteran owned businesses.
2. Military Reservist Economic Injury Disaster Loan Program (MREIDL)
In the situation that an essential employee has been called to active duty, the business may qualify for MREIDL. Funds from this loan program can be used to “provide the amount of working capital needed by a small business to pay its necessary obligations as they mature until operations return to normal after the essential employee is released from active military duty.”
The loan amount can be up to $2 million based on the SBA’s assessment, and any loan over $50,000 requires collateral, in the form of real estate when possible.
3. StreetShares Foundation
StreetShares Foundation was established with veteran small-business owners in mind. Apart from offering lines of credit, term loans, and government-contract financing to cover the cost of payroll and equipment before invoices are paid. This year, they awarded $15,000 after an application period to a veteran-owned small business. Keep an eye on them for future reward opportunities and check out their current financing options.
Having emergency cash on hand can be your key to managing cash flow.
4. Hivers and Strivers Angel Fund
Hivers and Strivers is an angel fund looking to assist military academy graduates with their startups. Their investments range from $250,000 to $1 million per round, and they may syndicate with other groups for larger investments. If you’re a graduate of one of the military academies and have a small business idea, you can make your submission on their website.
5. VA Office of Small & Disadvantaged Business Utilization (OSDBU)
The Department of Veterans Affairs offers potential assistance to businesses owned by economically disadvantaged individuals through their Office of Small and Disadvantaged Business Program. Their goal as a department is to provide these businesses with as many government contracts as possible. While this is not a financial grant or loan, the allocation of these contracts could mean money in the bank if your business qualifies.
Be sure to register with their office. Once your business has been verified, it will be added to their directory of small businesses and could be called upon for a government contract.
6. Nav’s Small Business Grant
Nav understands the challenges of starting, financing, and running a small business. To give small business owners a lift, Nav recently launched the $10,000 “Legitify Your Small Business” grant. While you don’t have to be a veteran to apply, we’d love to hear about your small business. Keep an eye out for the next application round to open, and check your business and personal credit score for free with Nav.
7. VA Small Business Grants
Meant for non-profit businesses, Department of Veterans Affairs Small Business Grants are aimed at helping veterans get their operations up and running. Like any other grant, this does not have to be repaid, but will require strict compliance on the part of your business. Be sure to review the guidelines before applying to be sure your business is in compliance.
8. VA VR&E Business Ownership Track
If you suffer from a service-connected disability and have the desire and plan to run your own business, you could qualify for assistance from the Vocational Rehab & Employment Ownership Track. Along with the requirements listed above, you must have an employment barrier or handicap, be enrolled in the VR&E, and your disability must make it difficult for you to obtain suitable employment.
Be sure to check the requirements and application to see if you could get help getting your business off the ground.
9. Service-Disabled, Veteran-Owned Small Business Program
Similar to the VA’s OSDBU program, the Service-Disabled Veteran-Owned Small Business Program aims to provide certain businesses with contracting dollars. The federal government sets aside at least 3 percent of contracting dollars for set-aside contracts for small businesses owned by disabled veterans.
Just like the OSDBU, you should apply for verification through the program before being added to a directory to be considered for certain contracts.
10. LendingClub Veteran Loan
LendingClub is one of many private lenders offering special benefits for veterans. Their small business loan for veterans has a term of one-to-five years, with borrowing limits of $5,000 to $300,000. You must have a credit score of at least 600 and a business that has been in operation for at least two years with annual revenue of at least $50,000.
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