A research done by small business administration in the U.S shows that veterans own over 2.5 million businesses. These veteran-owned companies are diverse in nearly all industries. Some examples include real estate, wholesale trade, agriculture, insurance and finance, construction, technical services, mining among others.
Like any other business, there is a need for finance in companies and small businesses owned by veterans. Most of these owners usually finance their small businesses with family and personal savings. This leads to constraints of inadequate capital and resources to expand the company in the time of need.
Veteran Administration (VA) loans are the primary source of financing given to all veterans as loans.
Eligibility for VA loans
These requirements may differ from different lenders based on their expectations. To access a VA loan, one must have a business owned more than half by;
- A veteran discharged from service with honor
- A member of the National Guard
- A spouse of a veteran or a widowed spouse of a service member who died in the line of duty
- Active duty military member
The application process of a VA loan
VA loans are unlike other small business loan application procedures which require the usual relevant business documents such as licenses. On top of these standard requirements when applying for loans veterans need to give documents like proof of their service in the U.S armed forces or military.
One can get a veteran business loan with the following documents;
- Form DD 214 – All veterans, current spouses of veterans and service-disabled veterans need to produce a copy of this form as evidence.
- DD form 2 – National Guard members need to provide this for as reserve identification card for the United States armed forces.
- DD form 1173 – this an identification card for a spouse or family member of National Guard members.
- Documents from the department of defense as confirmation for widows and to those who died due to injuries sustained in active service or line of duty.
Six sources of VA loans
- Loans from the small business administration (SBA) – The SBA offers veterans different means of finance to their businesses. Patriot excess loan program was the most common low-interest loan until 2013. Other types include SBA veterans’ advantage guaranteed loans and military reservist economic injury disaster loan with interest rates of less than 4%.
- Money borrowing from family and friends – this is the easiest way to get a loan cheaply or at some times free. Family is always concerned with your success despite the financial situation.
- Veteran-focused funding firms’ loans – several groups have emerged in the Pacific area to ease the process of acquiring loans for veterans. The veteran’s business fund gives loans with fair a payment plan and low or no interest at all.
- Other sources of funding include selling company equity, crowdfunding and invoice factoring
Other than the need to get a veteran business loans, there is much need to get training assistance and advisory services to grow their businesses.