Small Business Loans for Veterans
In the world of business loans, it's difficult for most groups of people to obtain funding from the federal government. One exception to that rule is America's veterans. Because of their service to America through the military, veterans are eligible for a number of benefits that non-veterans don't have access to. One of those benefits is entrepreneurial funding through the Small Business Administration (SBA). The SBA has a number of opportunities available to veterans looking to start or expand a business.
In addition, banks all over the country offer SBA-backed loans funded by private sources. These are more traditional loans very similar to what other business owners procure from banks. The major difference is that they are funded through government contributions and other entities. To find out about small business loans for veterans available through SBA channels, you can visit the SBA website or contact a local lending institution that specializes in small business loans.
Express and Patriot Express Programs
There are two main small business vehicles available to Americans veterans through the Small Business Administration. They are known as the SBA Express and Patriot Express programs. Both of these programs are fairly new and were established to help veterans returning from service in the Gulf region and Afghanistan. Both programs are similar in that they can provide funding to start a new business or expand an existing one. They differ in terms of their application process and any extra services included with a loan.
SBA Express Loan - The Express loan is very similar to a standard bank loan in terms of application procedure and approval. The one main difference is that applications to this program are put on a fast track for approval. According to the SBA website, applicants can receive a decision on an SBA Express loan usually within 36 hours. It is just a loan program, by the way, with no extra perks or resources included.
Patriot Express Loan - This program provides standard business loans along with some extra perks. The program is very similar to a conventional business loan in both application process and approval. Applicants will be required to present a thorough business plan and proper documentation, and they can expect to wait 5 to 10 business days for a response. The loans from this program are easier to get than the SBA Express loans because the application process is so much more thorough. Those who are approved will also have access to counseling and training programs designed to help them succeed.
In order to be eligible for either loan program individuals must qualify as:
- veterans - disabled or non-disabled
- members of a National Guard unit
- current or former reservists
- a widow or widower of a service member who died during service
- a widow or widower of a service member who died as the result of a service-related disability
- active service member (only eligible through the Transition Assistance Program)
Multiple Funding Sources
The small business loans for veterans can be used for any number of startup or expansion costs, including procuring inventory, paying lease costs, upgrading equipment and buildings, and so on. But please be aware that it is very rare for any business owner to procure all his funding from a single source. In all likelihood you will need funding from multiple sources in order to succeed in your business.
Also understand that starting a new business is significantly more difficult than expanding an existing one. National statistics suggest that the average small business in America will operate for a minimum of three years before turning a profit. The same statistics also show that the majority of small business failures prior to the three-year period are primarily the result of inadequate funding. To maximize the chances of your success, you need to receive commitments from investors to provide funding for the first three years. If it turns out you turn a profit earlier, that's a bonus.
In addition to your small business administration loans you'll need to seek funding from traditional banks, private equity firms, community organizations, private foundations, and any other groups who are willing to help a veteran start a business. Just make sure that all of your financing is protected by legal documents that spell out all terms and conditions.
Your Business Plan
Regardless of your source of funding, your business plan is a vital part of securing it. Writing a good business plan is the first step necessary to achieve your success. While there is no specific set of guidelines that govern how to write a business plan, there are some common things you will need to include. You can find free examples of business plans online that will help you figure out what should be included. It might help for you to write a couple of practice plans and have local business owners look them over for you.
If you'd like some formal training you might check with your local school district continuing education program. Oftentimes they offer night courses for new business owners which would include writing a successful business plan. The small business administration website also has free educational resources that would be helpful in this regard. Just remember that your business plan needs to convey to your potential funding partners your vision, goals, and understanding of the industry you plan to get involved with.
Keep your business plan as concise and short as possible. Yes, you want to include all the necessary details needed to convince investors to take a risk on you. But as with anything else, if your business plan is 10 pages of rambling paragraphs, it may reach the wastebasket before it's ever read. Treat your business plan like a resume; include only information that is relevant to the topic at hand.
As a former service member your country wants to see you succeed in your business ventures. That's why the federal government makes available small business loans for veterans. If you persevere with the same sort of diligence you showed during your military service, there's no reason why you can't succeed in the world of business.