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A Guide to Small Business Loans for Veterans

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A Guide to Small Business Loans for Veterans

Updated: October 9th, 2023

A Guide to Small Business Loans for Veterans

Finding capital to grow a small business is not for the faint of heart — it can be a daunting (and overwhelming) endeavor. And oftentimes, securing a small business loan can be even more challenging and complex for veterans due to potential gaps in financial history or being called in for active military duty.

With this in mind, we’ve created a guide to financing for veteran-owned businesses. The business loans and grants outlined below are just some of the many opportunities available to help veterans start, grow, and/or sustain their businesses. Let’s take a closer look at the VA small business loan options available to this community.

SBA Loans for Veterans

There are many different types of Small Business Administration (SBA) loans, all of which are available to veterans. The SBA partners with intermediaries (SBA-approved banks, credit unions, community development organizations, nonprofits, and other lenders) to provide low-cost, government-backed loans to small businesses. 

By providing a guarantee (up to 85% of the total loan amount) the SBA reduces risk for lenders and makes borrowing capital more accessible and manageable for entrepreneurs. Preparation is key when it comes to SBA loans if you’re a veteran entrepreneur, as it can take as long as six months to get funds in your bank account.

The Small Business Administration offers two programs that are specifically designed for veterans: The SBA Veterans Advantage (which offers fee waivers on loans authorized under the SBA Express Loan program) and the MREIDL VA loan.

SBA Express Loan program

The SBA Express Loan program is a part of the SBA 7(a) loan umbrella. As the name implies, the approval process for SBA Express loans is faster than standard SBA 7(a) loans — in fact, you’ll receive a response to your application from the SBA within 36 hours. However, borrowers still need to go through the underwriting process with individual lenders, which can take a few weeks. You can borrow up to $350,000, but these loans are only guaranteed up to 50% by the Small Business Administration. 

This quicker funding process and lower guarantee mean interest rates tend to be higher with SBA Express loans in comparison to other SBA loans as lenders take on a greater risk through this program (other loan programs are guaranteed up to 85% by the SBA). So, what’s the benefit for veteran entrepreneur borrowers? Currently, most borrowers have to pay an upfront guarantee fee of 3% for SBA Express loans of $150,001 to $350,000. However, under the SBA Veterans Advantage program, this fee is reduced from 3% to 0% for qualifying veterans in an effort to assist veteran-owned businesses.

The MREIDL program

The Military Reservist Economic Injury Disaster Loan program is a VA loan program that provides working capital (of up to $2 million) to cover “ordinary and necessary operating expenses” when an essential employee is called to active duty. The interest rate is capped at 4% and offers terms of up to 30 years (although the maximum maturity is based on your ability to repay the loan). Keep in mind: collateral is required for all MREIDLs over $50,000.

Am I eligible for an SBA VA small business loan?

According to the SBA, businesses must be at least 51% owned and controlled by an individual in one or more of the following groups to qualify:

  • Veterans (other than those dishonorably discharged)
  • Service-disabled veterans
  • Active Duty Military service members participating in the Military Transition Assistance Program (TAP)
  • Reservists and National Guard Members
  • 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

In addition, businesses must be for-profit, have fewer than 500 employees, and have less than $7.5 million in annual sales.

What can a VA small business loan be used for?

Funds from an SBA Express loan can be used for just about any business purpose. A few common examples include:

  • Equipment purchases
  • Working capital
  • Meeting your seasonal business needs
  • Refinancing debt
  • Setting up a new branch or buying an existing business
  • Construction or contract work
  • Buying commercial real estate
  • Funding startup costs

The MREIDL program for veteran-owned businesses comes with more stringent limitations because it is solely designed to help business owners maintain operations until the essential employee returns from active duty — not to compensate for lost income or profits. Additionally, a MREIDL VA loan cannot be used to refinance long-term debt or to fund business expansion.

Obtaining a veteran small business loan

Every VA small business loan program and lending institution has slightly different requirements. However, here are three basic steps to guide you through the process for this financing option.

Step 1: Determine why you need a small business loan and outline how much you’re looking to borrow.

Regardless of what kind of business loan you are applying for, lenders want to know why you are applying and what the capital will be used for, as well as how the funds help grow your business. Defining the purpose and amount of your loan could impact your ultimate funding.

At this stage, it’s important to get down to specifics and think through your financing options and how much money you will need to get the job done. Ask yourself:

  • Are you looking to move locations? When and where? How much are the upfront costs? How much of a cushion do you need to account for utilities, hiring staff, and any seasonal ebbs and flows? Do you need a real estate broker?
  • Do you need capital to hire a new employee? What will their job be? How much time will you need to spend training?
  • Will capital go to new equipment? What kind? How does the piece of equipment retain value over time?

This process will not only help you determine how much capital you need and the loan amount to seek but also prove to be valuable in conversations with potential lenders. The more details you can provide the better.

Step 2: Organize the VA loan paperwork.

After defining the purpose and your loan amount, it’s time to get prepared for the application process. For the best chance of approval (as well as lower interest rates), check your personal and business credit scores and make sure they are in good shape. You also will want to organize the necessary documents. Most lenders will want to see the following:

  • Credit scores (personal and business, if applicable)
  • Business plan
  • Bank statements
  • Annual revenue
  • Time in business
  • Personal and business tax returns
  • Balance sheets
  • Profit and loss statements

While some veterans may have difficulty accessing all of the information outlined above, its important to provide what you can. To identify yourself as a veteran, be sure to include the following documentation:

  • DD Form 214: Required for veterans, service-disabled veterans, or spouses of veterans.
  • DD Form 2: Required for transitioning active-duty military members, reservists, and National Guard members.
  • DD Form 1173: Required for spouses of transitioning active-duty military members, reservists, or National Guard members.
  • Military widows are required to have documentation from the Department of Defense.

First-time applicants of VA small business loans should not hesitate to reach out to veteran resource groups (outlined at the end of this article) for guidance. You can also find additional details on the required forms here.  

Step 3: Weigh your options for VA small business loans and apply.

The best VA loan will depend on your specific business needs, which is why it is critical to do your research beforehand. This is especially true for veteran-owned businesses with less-than-stellar credit. Careful research will not only help you understand your options but also help you avoid paying higher fees than necessary. Before accepting a business loan, thoroughly review the agreement (fine print included!). You should feel confident about the loan terms and repayment structure.

Alternative sources of capital for veteran-owned businesses

In addition to loans offered through the SBA, there are a few other funding options that are exclusively available to veteran entrepreneurs.

Financing Options

  • StreetShares: StreetShares is a veteran-run online marketplace that focuses on serving veteran-owned businesses. They offer term loans and lines of credit of up to $100,000, as well as commercial and government contract financing.
  • Hivers and Strivers: Hivers and Strivers is an angel investment group that supports startups founded by graduates of the U.S. Military Academies. Focused on early stage investments, they typically invest between $250,000 and $1 million.


In addition to VA small business loans, business grants are another option for veteran entrepreneurs. There are a number of grants available from both public and private sponsors.

Unlike business loans for veterans, one major advantage of a grant is that you don’t need to repay it. The hard part? Obtaining one. Grants are often catered to specific locations, industries, and causes, making the competition tough.

Below are a few grants sponsored by the federal government, nonprofit organizations, and even corporations.

Veteran-specific grants:

  • Streetshares Foundation Veteran Small Business Award: Streetshares launched the Streetshares Foundation in 2016 “with the goal of educating, inspiring, and supporting veteran business owners across America.” As of 2018, the StreetShares Foundation awards grants to three winners: first place receives $15,000, second place receives $6,000, and third place wins $4,000. The foundation chooses up to ten finalists based on criteria such as market fit and social impact.
  • The Outreach and Assistance for Socially Disadvantaged and Veteran Farmers and Ranchers Grant Program (2501 program): Run by the USDA, the 2501 program grants funds to organizations that provide technical assistance, tools, training, and education to help veteran farmers improve their operations and access capital.  
  • Farmer Veteran Fellowship Fund: Offered by the Farmer Veteran Coalition, The Farm Veteran Fellowship Fund offers small grants to veterans for the purchase of critical farm equipment or infrastructure. In 2019, applications will be accepted from February 1 to March 8. Awards range from $1,000 to $5,000.

Finding the right grant as a veteran entrepreneur

  • Grantwatch is a great starting point to refine your search for programs that suit your business niche. This online database caters to a wide variety of industries, from nonprofits that support veterans and their families to grants that assist in rehabilitation programs for veterans abroad.
  • is a search engine that allows you to find grants that match your entrepreneurial needs. Use the keyword “veterans” to kick off your search.

Applying for a grant

The application process for every grant differs. Some require creating a short business profile, writing a detailed business plan, or even filming a short video on your business idea.

Like any application, your grant proposal should be professional and detailed. If possible, research past grant winners to get a better understanding of what a winning application looks like. You should be able to thoroughly defend your request for capital with as much supporting documentation as possible.

Additional resources for veteran entrepreneurs

Whether you are applying for a VA business loan or grant, we’ve provided additional resources below to ensure you have the support you need throughout this process. You can check out the SBA for additional training programs and support created specifically for veterans.

  • Veterans Business Outreach Center (VBOC) Program: This program offers local training and mentoring programs across the country.
  • Veteran Business Outreach Centers: These centers help veterans transition into civilian life within an entrepreneurship program by providing access to management courses, market research, and qualified referrals to grants.
  • HCC Veteran Entrepreneurship Training (VET) Program: This program offers small business owners who have served in the U.S. military access to angel investors and funding partnerships. Participants in the VET program also receive mentorship on how to start and sustain a business.
  • Women Veteran Entrepreneurship Training Program (WVETP): Women veterans, women service members, and women spouses of service members and veterans are offered training as they start or grow a business through WVETP. This program is funded through several grantees including:
    • IVMF – Veteran Women Igniting the Spirit of Entrepreneurship (V-WISE)
    • Bunker Labs – EPIC and BUNKER IN A BOX
    • Lift Fund
  • Service Disabled Veteran Entrepreneurship Training Program (SDVETP): This program is specifically designated for service-disabled veterans, and offers entrepreneurship training through several grantees including:
    • The IVMF – Entrepreneurship Bootcamp for Veterans with Disabilities
    • The Veterans Entrepreneurship Program
    • The Veteran Entrepreneurship Jumpstart Program
    • Dog Tag Inc.
  • SCORE Association: This nonprofit has counselors and mentors nationwide. Volunteers provide free business advice and mentorship on grant applications and more.

Veterans are a critical community within the small business ecosystem. Whether it’s through the SBA or independent organizations, there are a variety of financing options available and institutions seeking to help veterans access capital.

Small Business Loans for Veterans from Funding Circle

If you are a veteran with an existing business of two years or more, Funding Circle is another option for financing. We’re committed to offering:

  • Best-in-class service with a dedicated account manager
  • Fixed annual interest rates with a consistent, once-monthly payment over the life of your loan
  • Transparent, competitive interest rates and a simple, one-time origination fee

Check out the FAQs below for more information about our financing programs and eligibility requirements.


How does Funding Circle’s application process differ from other small business lenders who help veteran business owners secure funding?

The underwriting process at traditional banks can be lengthy and confusing.. At Funding Circle, we’ve taken the best parts of an SBA business term loan — like fixed and affordable once-monthly payments and no prepayment penalties — and created something faster and more flexible. Unlike traditional lenders, we also deliver a best-in-class and transparent experience to our business customers. You’ll work with a dedicated account manager who will guide you through the entire application process and remain focused on meeting your unique financing needs. We strive to deliver a decision quickly — often in as little as 24 hours after document submission.

How long does it take to apply for term VA loans through Funding Circle?

Funding Circle’s application process is quick, easy, and transparent. You can apply for a business loan and get a decision in as little as 24 hours after document submission.

What documentation is required with my application?

  • 2 most recent years of business tax returns
  • 1 most recent year of personal tax returns
  • 6 most recent months of bank statements
  • Business debt information
  • Signed guarantor form for any owner with 20%+ ownership of the business

Do you offer startup business loans for veterans?

We like to support all kinds of entrepreneurs, but our focus right now is on helping established small businesses grow and thrive. To qualify for a loan through our  marketplace, veteran-owned businesses must be in operation for at least two years. 

*SBA 7(a) interest rates are based on the Prime Rate. The current Prime Rate is 8.0% – WSJ March 22, 2023.


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