Financing Options for Veterans – Loans, Grants, Advances
Mar 2, 2016
What do the CEOs of Lockheed Martin, Procter & Gamble, and FedEx have in common?
They are military Veterans.
According to a 2013 study conducted by the SBA Office of Advocacy, 9.1 percent of business owners were Veterans in 2012. Veterans are also two times more likely to run two or more businesses than non-veterans.
So why do military Veterans make for natural entrepreneurs?
Turns out the capabilities and conviction required to succeed in combat are very similar to the aptitudes and attitudes required to start and grow a business.
Persistence, self-confidence, teamwork, resilience, passion, discipline, leadership: these are the hallmarks of both military Veterans and business owners.
To quote the authors of “Introduction to Business Ownership for Veterans and Military Service Members“: “One of the greatest assets that a service member brings to the civilian work world is a single-minded focus on accomplishing the mission, along with the supervisory, management, and technical skills essential for mission success.”
Unfortunately, poor financial assistance can put a damper on their entrepreneurial dreams. A lack of personal (and business) credit, education, experience, and/or contacts often prevents them from being backed by traditional lending institutions.
The good news?
Several federal, private and nonprofit organizations are now dedicated to funding the dreams of these celebrated heroes.
Whether you wish to start a business, expand a business, or partner with another business, the following list of educational resources and alternative funding opportunities for military Veterans will provide invaluable assistance:
Part I: Educate Yourself
If you are relatively new to the entrepreneurial realm – or want to brush up on your knowledge – check out the following enlightening resources:
- Veteran Entrepreneur Portal (VEP): A collaboration between the Department of Veterans Affairs and BusinessUSA, the VEP should be your first stop. From learning how to apply for federal contracting opportunities to researching federal funding sources, you will find it all here.
- Institute of Veterans and Military Families (IVMF): Launched in 2011 by Syracuse University, IVMF develops and supports an impressive array of “education and employment focused programs” to enhance the competencies and confidence of Veterans. Here are two of their most popular projects:
- Women Veterans Igniting the Spirit of Entrepreneurship (V-WISE):. A three-phase premier educational training program, V-WISE helps even the most novice women Veteran entrepreneurs find and translate their passion into a profitable venture by equipping them with appropriate strategies, skills and support.
- Entrepreneurship Bootcamp for Veterans with Disabilities (EBV): Named by Inc. as one of the nation’s ’10 Best’ entrepreneurship programs in 2011, EBV is a three-phased start-up initiative that offers “‘experiential training in entrepreneurship” to post 9/11 Veterans with disabilities and their family members at no cost.
- Boots to Business (B2B): An entrepreneurial education and training program that helps transitioning Service members evaluate business concepts, develop business plans, access start-up capital, and receive additional technical assistance to succeed.
- SCORE Veteran Fast Launch Initiative: Combines SCORE’s respected network of 13,000 volunteer mentors and trainers in 320 chapters with free software, mentoring, 24 x 7 workshops, templates, tools and services. Contact your local SCORE chapter today.
- e. Veterans Business Outreach Center (VBOC): From networking opportunities to entrepreneurial training to financial statement reviews, VBOCs help Veterans entrepreneurs in varied ways.
- Veteran Crowd: A broker-dealer platform that connects progressive and results-driven companies with suitable investors.
- Veterans Business Services (VBS): Facilitates “win-win partnerships” between successful service-disabled Veteran-owned small businesses to enhance the possibilities of bagging major Federal and State contracts.
- SBA 8(a) Service-Disabled Veteran Owned Businesses Concern Program (SDVOSBC): Authorizes procuring agencies to set “acquisitions aside for exclusive competition” amongst eligible service-disabled Veterans-owned small businesses.
- VetBiz: A repository of beneficial videos, testimonials and printable documents. Visit your nearest SBDC.
- Navoba: Strives diligently to enact laws that create varied opportunities for Veteran-owned businesses. For instance, check out their Buy Veteran campaign.
- VetFran: The leading resource on franchising opportunities for Veterans and their families, with over 650 franchise brands in its’ network.
- American Corporate Partners (ACP): Aims to strengthen the connection between corporate America and veteran communities through mentoring, career counseling, and networking.
Part II: Funding Opportunities: Loans, Grants, Discounts
- Military Reservist Economic Injury Loan: Provides ‘last minute’ funds only for those small businesses that are unable to meet their profit margins because “an essential employee was called-up to active duty.” Maximum loan limit for most businesses: $2 million.
- SBA Express Loan Program: Authorized nearly 60 percent of all 7(a) loans over the past decade. No upfront fee for authorized loans of up to $350,000.
- Veterans Business Fund (VBF): Provides qualified Veterans – who lack the required equity capital to qualify for small business loan – with supplemental capital at favorable repayment terms. This loan is provided in conjunction with an outside financial institution. Not accepting applications at this time.
- Hivers and Strivers: An “early stage” Angel Investment Group that actively supports start-up companies founded and run by driven and determined graduates of the U.S. Military Academies. Invests $250,000 to $1 million in a single round.
- Veterans’ Opportunity Fund (VOF): A multi-stage venture capital fund that invests up to $3 million in veteran-owned east coast based technological companies in need of growth capital.
- Franchise Discounts: Franchising is a safer alternative than starting your own business because of its’ proven business model, which is perhaps why there are more than 66,000 veteran-owned franchise businesses in the U.S. Several big franchises are giving qualified Veteran franchisee owners multiple financial breaks to help them get off the ground:
- 7/11: Up to 20% off the initial franchise fee – maximum savings: $50,000 – and up to 65% financing through 7-Eleven
- UPS: $10,000 off the franchise fee of a new UPS Store Location and 50% off initial application fee
- Little Caesars: Franchise fee reduction: $5000 to $20,000; Initial Equipment Credit: $5,000 to $10,000; Total Benefits: $30,000 to $50,000.
- VetFran Business Grant Fund: Provides financial grants – up to $10,000 per grant – for Vets who have been awarded a franchise through the VetFran program.
Part III: Funding Opportunities – Alternative Financing Options
Federal loans, while extremely appealing, are also competitive and long-drawn. So here are some private funding options that might get you the capital faster and without as many bureaucratic hassles:
- StreetShares: Veteran owned and operated, StreetShares lends a twist to the traditional crowdfunding model. It is an “auction marketplace” where interested Veteran business owners can share their story directly with investors who will then compete to fund their loan.
- What They Offer: 3-36 month term loans between $2,000-$100,000, no prepayment penalties, fixed interest rates, and quick funding. Personally back a portion of every loan.
- Lending Club: Connects borrowers and investors at much lower cost than traditional bank lending.
- What They Offer: Longer repayment terms, no prepayment penalty, lower monthly payments and competitive APR rates.
- Criteria: 24 months in business, at least $75,000 in annual sales, no recent bankruptcies or tax liens, own at least 20% of the business, have fair or better personal credit
- Funding Circle: “British peer-to-peer” lender. Works best for established businesses with good credit that want to expand. One of the key target markets is franchise businesses.
- What They Offer: affordable term business loans of up to $500,000 over 1-5 years. Rates starting at 5.49%, no hidden fees, and quick funding.
- Prosper: America’s first peer-to-peer marketplace, Prosper has funded over $6 billion loans for new and established businesses. Individual lenders invest as little as $25 in each selected loan listing.
- What They Offer: Loan amount is set at anywhere between $2,000 and $35,000, at an APR of 6% to 36%. Personal loans are unsecured and issued to you as an individual.
- Legend Funding: A top-rated provider of merchant and business cash advances, as well as SBA loan assistance.
- What We Offer: Amounts between $5,000 and $500,000, approval in under 36 hours, flexible repayment term, unsecured funding, low initial rates and loyalty discounts, and marketing and SBA loan assistance at no extra charge
- Criteria: At least 6 months old business, minimum monthly revenue of $10,000.
Military Veterans make excellent ‘Commanders of Business.’
Living through the unpredictable conditions of military conflict equips them with the courage, commitment, and creativity needed to maneuver around the potholes of entrepreneurship.
By securing the necessary capital from one of these sources, Veteran-owned businesses can continue to contribute meaningfully to the growth of our nation.
Choose an organization that treats your business like a cherished partner and enjoy your entrepreneurial ride!