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In 2021, the total number of military veterans in the United States reached 19 million. Most veterans are from the Gulf War era, and nearly 73 percent are aged 50+. Veterans only account for roughly seven percent of the current population. In 1980, the percentage reached 18 percent of the population.

In most cases, the adjustment period for veterans re-entering civilian life can be challenging. Roughly 48 percent of post-9/11 veterans said that readjusting to civilian life was either somewhat (32 percent) or very (16 percent) difficult for them. It can be challenging for veterans to relate to people that could never understand their military experiences.

Another major obstacle in the transition is that it can be difficult for many vets to find a job. Converting war-time skills into peace-team jobs in the private sector doesn’t always work. But in typical military fashion: when the going gets tough, the tough get going. A recent surge of veterans has decided to use their unique qualities to create their own jobs.

What types of business loans are best for veterans?

Starting a new business can be a challenge for anyone, and getting in over your head is easy. Fortunately for veteran entrepreneurs, their service to their country has earned them an additional step up from the competition. 

Several types of business financing options are available exclusively for veteran business owners. Using these services is easy to secure the funding you need to start your veteran-owned small business plan. Even better, they typically come with the least amount of strings attached.

One of the best places to start your search for financial aid is the U.S. Small Business Administration (SBA). Several types of business loan options are aimed at helping veteran small business owners. However, the best one of these programs is easily the SBA Veterans Advantage Program.

The SBA offers all small-business owners and entrepreneurs a business loan called the SBA 7(a). The Obama administration initiated the Veterans Advantage Program in 2014 to offer fee relief for veterans seeking this type of loan application. 

The program is only available for active duty military service members, honorably discharged veterans, service-disabled veterans, reservists, or the spouse/widow of any veteran meeting the previous criteria.

The primary benefit of the Veterans Advantage Program is that it can significantly reduce the upfront guaranty fees of loans. The exact discount will depend on the amount of the loan and a few other factors:

  • Any loan that’s $150,000 or less or an SBA Express Loan will have a guarantee fee of $0.
  • Any non-SBA Express Loan between $150,001 and $500,000 will be 50 percent less than the guarantee fee for non-veteran-owned businesses. Loans with a maturity over 12 months will have a 1.5 percent fee of the guaranteed portion, and loans with a maturity of fewer than 12 months will have a 0.125 percent fee. 
  • Any loan between $500,001 and $700,000 with a maturity over 12 months will have a guarantee fee of 3 percent. 
  • Any loan between $700,001 and $1,000,000 with a maturity over 12 months will have a guarantee fee of 3.5 percent.
  • Any loan between $1,000,001 and $5,000,000 with a maturity over 12 months will have a guarantee fee of 3.75 percent. 
  • Any loan that’s between $500,001 and $5,000,000 with a maturity of fewer than 12 months will have a guarantee fee of 0.25 percent. 

The 4 best small business loans for veterans:

In addition to the Veterans Advantage Program mentioned above, you’ll also have the option of taking out specialized business loans. Many traditional banks and credit unions offer small business loans crafted explicitly for veterans. These are the best four business loan programs currently available to veteran borrowers:

Learn MoreOn Navy Federal’s Website

The Navy Federal Credit Union has particular eligibility requirements that must be met before you can join. 

You must meet one of the following criteria: 

  • Be an active duty service member (in the armed forces, be a National Guard member, or have ties to the Department of Defense in the federal government)
  • Be a veteran of any of these services
  • Have an immediate family member with a Navy Federal membership

Once accepted, you’ll be a member of the Navy Federal Credit Union for life.

The veteran business loans available through the Navy Federal Credit Union can be used for purchasing equipment, vehicles, cash flow, business resources, or as working capital. The loans typically have a cap of $100,00, term limits of five years, and come with an average annual percentage rate between 11 percent and 18 percent. Alternatively, you could open a business line of credit if you prefer revolving credit instead of a standard loan.

The Navy Federal Credit Union doesn’t list any specific requirements for gross annual revenue. However, they will request to see that you have a debt service coverage ratio of at least 1.25 or higher, one full year of registered business operations, and a credit score of 650 or higher.


Union Bank

Learn MoreOn Union Bank’s Website

Union Bank has one of the most lenient requirements for veteran-owned business owners to receive a bank loan. The financing from Union Bank is made possible through a credit program under the Equal Credit Opportunity Act. The goal of this program was to help veterans receive the funding they need to start and grow their businesses.

The loan size of a Union Bank business loan can reach as high as $1 million, but any application over $250,000 will take much longer to process. These loans are secured or unsecured and come with terms lasting between 18 and 84 months. The interest rates for these loans are determined case-by-case and can vary significantly between applicants.

The qualifications for a Union Bank business loan include the following:

  • An open Union Bank business bank account
  • An in-person visit with a local branch to determine eligibility
  • A veteran must own at least 51 percent of the business


Learn MoreOn Accion’s Website

Accion is a small business microloan lender that specializes in loans for startups and established businesses. Accion’s goal is to help a variety of business owners who might not receive serious or fair offers otherwise. Various loans are available for veteran-owned, minority-owned, women-owned, green, food and beverage businesses, and people with disabilities.

The cap for an Accion business loan is only $50,000, which can be an issue for some businesses. However, the annual percentage rate can reach as low as 8.99 percent, and you only need a FICO score of 576 to qualify. The money can be used for any business expense, you won’t need to offer anything as collateral, and you should be approved within five to ten days.

Some of the additional requirements to qualify for an Accion business loan include:

  • Proof of an alternative source of income for repaying the loan
  • No bankruptcy within the last 24 months
  • All former personal debts must be paid off
  • No more than $3,000 in “past due” debts
  • Must be in business for at least two years to qualify for the $50,000 maximum loan


Learn MoreOn SmartBiz’s Website

Technically, SmartBiz doesn’t directly issue any loans to business owners. Instead, it helps to match loan applicants with SBA loan lenders inside its network. Since the government backs SBA loans, they can require substantial paperwork. 

It’s common for the process to take at least 90 days from submitting your application until you receive your loans. However, SmartBiz can usually determine whether you’ll qualify for an SBA loan within a few minutes. It doesn’t necessarily help with the paperwork, but it will save time.

SmartBiz SBA loans are available for working capital and debt refinancing. The possible borrowing amount ranges anywhere between $30,000 and $350,000. The APR for these loans is between 7.25 and 10.29 percent, and term lengths can last up to ten years. 

Additional fees can be tacked on, including a two percent referral fee, a two percent packaging fee, bank closing costs, and a guaranty fee between 0 and 3.5 percent. 

To qualify for a SmartBiz SBA loan, you’ll need to meet all of the following requirements:

  • Must be a for-profit business operating for at least two years
  • Prove that business revenue is enough to support repayments
  • A credit score of 650 or higher
  • A business credit score of 140 or higher
  • All owners must be legal U.S. citizens with no criminal record and no previous government loan defaults
  • No open tax liens
  • No bankruptcies or foreclosures in the past three years

Finding the right loan can help you grow your business more easily

There are many different programs designed to help veterans get their businesses started. These various programs and grants are an excellent first step, but sometimes they might not be enough. If you need to take out a business loan, the list above includes the best business loans available.

As a veteran, you have specific core values that can help you succeed as an entrepreneur. Don’t let financial issues prevent you from establishing your own business. Far too many beneficial programs are available for you to give up on your dream. 


For more information about loans and other business topics, check out our other great content on Entrepreneur.com.

Information provided on Entrepreneur Guide is for educational purposes only. Your financial situation is unique and the products and services we review may not be right for your circumstances. We do not offer financial advice, advisory or brokerage services, we do not recommend or advise individuals to buy or sell particular stocks or securities. Performance information may have changed since the time of publication. Past performance is not indicative of future results

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