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Veteran Entrepreneurship: Small Business Loan Options for Veterans


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Last week the Small Business Administration celebrated National Veterans Small Business Week. During November 3-7 various events were held to support and encourage military entrepreneurship.

With more than 21 million veterans in the U.S., you’ve probably noticed that veteran-owned businesses are on the rise. Currently, one out of ten businesses in the U.S. is veteran owned, and the numbers are continuing to grow. If you’re a veteran entrepreneur or know someone who is, below you’ll find everything you need to know about veteran small business loan options.

What You Should Know About Funding for Veteran-Owned Businesses

Increased Job Growth

The revenue gained from veteran entrepreneurs is astounding. According to the Small Business Administration, receipts from veteran-owned businesses were $1.2 trillion. Statistics also show that veteran business owners’ entrepreneurial efforts create jobs; in 2013, they employed 6 million workers.

Veterans possess the discipline, leadership, and training necessary to start and grow businesses. They are 45 percent more likely to be self employed than any other entrepreneurial group and numbers indicate that veterans are choosing small business ownership over traditional employment.

Small Business Loans for Veterans

All businesses need adequate access to capital, including veteran business owners. Unfortunately, previous loan initiatives that were created to assist veteran entrepreneurs are expiring. This includes the Patriot Express Loan which expired in 2013 and the SBA Veterans Advantage Loan Program which is set to expire in December 2014.

Even though it may appear that veteran loans are dwindling, there are a few options left on the table. Here are three unique funding options for veteran business owners:

1. Hivers and Strivers

Hivers and Strivers is an Angel Investment Group that focuses on investing in start-up companies founded and run by graduates of U.S. Military Academies. The group investments range from $250,000 to $1 million and the group has a network of other investment partners that they work closely with to broker deals for the entrepreneurs when additional investments are needed. This group is not a viable option for every former service member because of the military academy requirement, but it’s a great option for those who qualify. 

2. The Veterans’ Opportunity Fund (VOF)

The Veterans’ Opportunity Fund is the first of its kind. It’s a venture capital fund formed to invest in businesses that are started, owned, and/or managed by military veterans. The investment size of the portfolio is up to $3 million, but a business that is seeking funding must have early revenue or have a product or service that can be evaluated.

3. Street Shares

Street Shares is an online lending platform where veteran business owners can seek funding for their start-up or expansion expenses. The online auction periods range from 5 to 30 days. Business owners directly pitch to lenders while they seek loans of $500 to $5,000. When a loan is funded, Street Shares takes the first 10 percent while the investor can fund any portion of the loan up to the remaining 90 percent.

Advice on Choosing a Lender for Your Veteran Business

Take your time and review all of the options listed above. Make sure that you research each option thoroughly before determining which option is right for your business.

If you decide that the options listed above are not a good fit, you can explore other small business loans. As you begin to review your options, the SBA is a great place to start. The SBA does not directly provide funding, but they do guarantee the loans. Here are a few additional choices that are available:

1. Microloan Program

The SBA Microloan program provides up to $50,000 to assist businesses with funding. The average microloan is $13,000.

The terms of the loan can vary. Although the interest rates may fluctuate, they are generally between 8 to 13 percent. Repayment factors may include:

  • Loan amount
  • Planned use of funds
  • Requirements determined by the lenders
  • Needs of the small business borrower

You will find that certain loans have stipulations on what the funds can be used for. In terms of microloans, the funds can be used for:

  • Working capital
  • Inventory or supplies
  • Furniture or fixtures
  • Machinery or equipment

2. 7(a) Loan Program

The 7(a) Loan Program is a general business loan. The program provides up to $5 million, although average loans are in the $300,000 range. Eligibility for the loan is based on certain business characteristics. In order to be eligible, the applying business must:

  • Operate for profit
  • Be a small business
  • Transact or planning to transact business in the U.S. or one of its possessions
  • Have invested equity
  • Use alternative financial resources, including personal assets before applying
  • Demonstrate the need for the loan
  • Use the funds for a sound business purpose
  • Not be delinquent on any existing debt obligations to the U.S. government

The repayment terms of the 7(a) Loan Program depend on the purpose of the loan. The different maturity repayment terms include:

  • 25 years for real estate
  • 10 years for equipment
  • 7 years for working capital

Real Estate & Equipment Loans: Certified Development Company/504

This type of loan provides financing for major real estate and equipment. In order to be eligible for the loan program, you must meet a long list of detailed criteria. Some of the eligibility requirements include:

  • Business must be for-profit
  • Not have funds available from other SBA sources
  • Proceeds may be used for financing certain fixed assets
  • Transact business in the United States or its possessions
  • Review a list of additional eligibility criteria here

Alternative Business Loans for Veterans

Finding and gaining access to capital can be tricky for any entrepreneur. Veteran business owners struggle with the same issues in relation to finding funding solutions. As a business owner you may decide to follow scores of entrepreneurs and seek funding from an alternative lender.

Alternative online lenders like Kabbage are a viable option for veteran-owned business owners. As we mentioned in a previous Kabbage post, Online Loans For Your Business: Everything You Need to Know, alternative lenders offer more flexible lending criteria, which has made them a godsend for entrepreneurs struggling to access capital. Here are a few characteristics of alternative lenders:

  • Automated loan approvals – The online process allows business owners to know in minutes if they are approved for a loan. This is in contrast to the waiting time imposed by traditional lenders.
  • Review of real-life data – Alternative lenders use the real-life data of the business including online sales, banking transactions, the number of employees, and industry trends to make a determination.
  • Flexible terms – You can use the funds as you need them and save what you need for later.

As you navigate through the rewarding opportunities that entrepreneurship has to offer, seek out organizations whose main focus is to help you. Some organizations focused on supporting, training, and encouraging veteran business owners are VetBiz Resource Center, Boots To Business, and the Office of Small & Disadvantaged Business Utilization – a division of the Department of Veteran Affairs.

Are you a veteran business owner? What’s your story? We want to hear it! Tell us about it by tweeting us @KabbageInc


Kabbage Team

Kabbage is here not only to provide access to the small business funding you need, but to also help you grow your business through free marketing tips, webinars, tools and more. Is there something you'd like us to cover or want to get your small business featured on our blog? Send us a note at