Veterans Business Loans

Veterans Business Loans: Essential Pre-Application Insights

Marcus Marion, CMA™ 2 months ago 0 10

It’s well-documented that post-military life can be challenging and intimidating for most veterans. Some have compared the experience to relocating to a foreign country, which requires learning new customs and navigating rules entirely new for you. Most of these rules apply primarily to your finances.  

Fortunately, you don’t have to struggle as a veteran to get a grip on your finances without assistance. You have several resources to ensure a smooth and stable financial life after the military. Some of these resources come from loan providers, with loans designed solely to meet the needs of veterans.  

An excellent example of these financial products is veteran business loans. This post guide provides valuable insight into the pre-application processes surrounding VA business loans. This way, you can know how to get a small business loan as a veteran. 

Let’s start by better understanding the fundamentals.  

What Are Veteran Business Loans?

Business Loans For Veterans

Veteran business loans are financial products meant exclusively for small businesses owned by veterans in the US.  

According to the US Small Business Office of Advocacy, ex-military entrepreneurs own about two million small businesses nationwide, employ almost 5.3 million Americans, and generate over $1.14 trillion annually. To run and expand these businesses, many veterans have to review the business loans at their disposal. Famous examples of private and private business loans for veterans include: 

  • Government loans 
  • Private bank loans 
  • Business line of credit 
  • Equipment loans 
  • Microloans 
  • SBA Veterans Advantage 
  • CDC/504 loans  
  • 7(a) loans 
  • Military Reservist Economic Injury Disaster Loan (MREIDL) 

But most importantly, you must know how to improve your loan eligibility as a veteran.  

General Requirements For VA Business Loans

VA Business Loan Requirement

It’s a good thing veterans don’t have to fight before they secure funds to pursue the American dream. Hence, many lenders have streamlined their application process with criteria based on factors other than the applicant’s credit score. Generally speaking, the VA business loan requirements you need to meet include: 

  • Six months to 2 years in active business 
  • Zero to 685 minimum credit score 
  • $100k in yearly sales 

All hope isn’t lost for those who went through some challenges along their business journey. It all depends on your chosen VA loan program and how well you prepared before submitting an application.  

Insights For Improving Pre-application Eligibility  

One of the best things about VA business loans is most providers don’t look for high credit scores, substantial bank balances, or decades in business. Nonetheless, veteran business owners can take some steps to ensure access to these loans.  

First and foremost, you need to become a verified veteran-owned business. This process isn’t too complicated, and you complete verification through a pre-qualification stage. Apart from this, you can improve your chances with the steps below. 

Properly Organize Your Paperwork 

As much as lenders and loan programs for veterans vary, they also have slightly different paperwork requirements for proving loan applications. In some cases, you’ll have to provide business licenses, organizational documents, and rental contracts. Generally speaking, you must be ready to provide more paperwork and business info if you plan to go with a public program.  

Plus, you have to compile multiple years of tax returns at the ready as part of the VA loan pre-approval steps. Luckily, you don’t have to worry about paperwork with some online lenders since they usually pay out loans faster. Nevertheless, you must ensure all the required paperwork and information are ready before completing an online or offline application.  

Reduce Personal Debts 

Next, you must take every step necessary to limit the personal debt under your name. Business founders typically have more personal debt because they tend to cover startup costs using their finances. Conversely, carrying a substantial debt or failing to make your monthly payment can scare away most veteran loan providers.  

Protips: The Servicemembers Civil Relief Act(SCRA) enables some veterans to cut down on interest rates for their debts carried from their active duty days.  

If you meet the requirements for SCRA relief, your credit card debt, car payments, and mortgage interests can go down significantly. Once you can reduce your monthly repayment amounts significantly, you have a path to a better track record of promptly paying your monthly amounts. Most lenders will notice your actions to responsibly pay off your debts and favorably consider your application.  

Support Your Argue With Military Experience

VA Loans After Military Service

Lenders don’t just deal with faceless businesses when giving out loans. Though it’s a business loan, financial institutions lend to people, explaining why an applicant’s background is crucial to the approval process. As a veteran, you want to use everything in your military experience to your advantage. You have to get creative here to reach your business goals.  

However, this might prove challenging to most veterans since one of the military’s core values is humility. Thus, selling yourself might not come naturally. However, you need to understand how long you served and the challenges you surmounted during service can translate to business success and showcase that when talking to financial institutions.  

Clear Outline How The Loan Impacts Your Business Goals 

Those looking for large sums of money have some further explaining to do. You should paint a vivid picture of how the money will help turn your business around and bring massive growth. Simply put, telling your lenders why the specified amount is precisely what you need for your business shouldn’t be difficult.  

It’s a common error among new entrepreneurs to over-borrow and go for too much debt too early. You want to avoid this mistake by convincing yourself and lenders that the money you’re borrowing is indispensable to a concrete business plan. For instance, if you intend to use your loan to solve cash flow problems, showing lenders the business won’t return to the same point after securing the funds is vital. 

If you have doubts about the exact amount to secure, you can use a VA business loan calculator for assistance.  

Summary 

Ultimately, a deep understanding of the options available at the business and personal levels will go a long way to securing your finances after the military. All you need to do is do the necessary homework to ensure you get the best deals and explore every available VA small business loan. You can learn everything about the criteria for qualifying for various loans and the specifics lenders look for before approving each application. You may even take things a step further by calling up loan providers and discussing any further questions.

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