Updated on April 18th, 2023

SBA Requirements for Veteran-Owned Business Loan

Does the VA provide business loans to veterans? No, the VA does not offer a business loan. The SBA provides loans to veteran-owned businesses.  

Brad Nakase, Attorney

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Veteran-Owned Business Loan, Example

After three tours of Iraq, Jason returns home to Los Angeles, where he feels lost. His military career was his identity for so long, and now he feels that he needs a new purpose. While working in his garage on some woodworking, Jason remembers his passion for building beautiful shelves, tables, and other furniture. Enthused, Jason decides to start his own veteran-owned business, through which he will hire other vets in need of work and companionship. However, Jason realizes that he will need money in order to buy the necessary equipment and workshop space. For his work, he requires wood, tools, and a warehouse. While Jason has some money saved that he can use toward these purchases, he realizes that he will most likely require a loan. As a veteran, Jason wonders if his military status entitles him to certain kinds of veteran business loans. He wonders, specifically, what the requirements for these loans are, and whether he qualifies.

What Are Veteran Business Loans?

According to the Small Business Administration (SBA), there is one veteran-owned business for every ten veterans in the United States. These businesses have shown themselves to be extremely successful, earning more than one trillion dollars for the American economy. Even with this success, veterans have the opportunity to grow their companies even more with the help of veteran business loans.

It is important for veteran entrepreneurs to understand the process of applying for a small business loan. Because veterans have access to unique federal support programs, these entrepreneurs should consider these opportunities with care.

The method by which a veteran entrepreneur goes about choosing a loan will depend on a variety of factors. These include the following:

  • Business history
  • Revenue
  • Credit score
  • Overall financial condition

This article will review everything veteran entrepreneurs should know about small business loans.

What Should a Veteran Entrepreneur Know About Applying for a Veteran Business Loan?

The following four topics offer advice for veteran entrepreneurs who are hoping to start their own small business. Form understanding the challenges of running a business to applying for loans, these points can serve as a guide for the aspiring veteran small business owner.

Know the Challenges that Veteran-Owned Small Businesses Face

Even though there is a large number of small business owners who are veterans, in general, veteran business ownership has declined in recent years. Since 2001, less than 5% of veterans have started their own business ventures. This is a steep decline from the post-World War II period when almost half of war veteran opened their own businesses upon returning home from service.

According to a study by Syracuse University, one of the greatest challenges faced by veteran entrepreneurs is access to capital. Indeed, the majority of veteran business owners agreed that limited access to capital inhibited their ability to grow their businesses. Part of the reason this problem exists is that the current G.I. bill does not provide low-interest loans to start a veteran-owned business. The previous G.I. bill, by contrast, did just this.

Veteran-owned small businesses form a crucial part of the American economy. These ventured also provide safe havens for veterans returning from combat or service. These individuals benefit from working for someone who understands their history and needs. The advantages of these veteran-run workplaces make it especially important that business owners know their financing options.

How to Choose a Veteran Business Loan

A veteran applies for a small business loan in the same manner as any other businessperson. In order to apply for a traditional term loan, a veteran business owner will need to provide financial statements, a detailed business plan, as well as business documentation.

A veteran also has the option of applying for a Small Business Administration loan, the details of which are discussed in the following section.

Small Business Administration (SBA) Veteran Loan Options

It is important to remember that when a business owner receives a loan from the Small Business Administration, the organization will not be lending the business owner the money. Rather, the owner will be borrowing from a bank, financial institution, or online lender that offers SBA-backed loans.

In addition, one should remember that it is necessary to have a strong credit score and finances to qualify for an SBA-backed loan. In essence, SBA loans are designed for businesses that have used all their other financing options and require an alternative. For this reason, if a small business owner has not yet applied to other business entities, he or she will likely not qualify for a Small Business Administration loan.

An entrepreneurial training program is available for veterans through SBA.gov and the Office of Veterans Business Development. This program can teach veterans the basics of entrepreneurship or running a small business. It also helpfully includes advice on how to create a business plan.

The Small Business Administration also offers the SBA Veterans Advantage program. This program is only available to businesses that are owned 51% or more by an individual who meets the following specifications:

  • A veteran that is an active-duty service member
  • Any veteran (that has not been dishonorably discharged)
  • Service-disabled veteran, reservist, or national guard member

It is also important to note that the husbands or wives of any veteran that meets the above requirements also qualify for this kind of funding. Also, widowed spouses of service members who died in service or from a service-related disability qualify for this program.

In general, the Small Business Administration Veterans Advantage program simplifies the process for veterans to obtains loans. Happily, it also makes the process more affordable.

How to Choose the Right Kind of Veteran Business Financing

Though the process requires both resources and time, applying for a loan is typically straightforward. That said, it is a bit harder to choose a loan structure that is suitable for one’s specific business. In order to determine this, a business owner will need to think about his or her particular business needs. When a business owner chooses the appropriate loan for his or her small business, this type of small business financing can help take one’s company to the next level of success.

However, before taking out a loan, a small business owner should know how they plan to spend the money. For example, does an owner require a safety net to protect the business in the event of a crisis? Perhaps a business owner would like to grow or expand their existing business and requires capital to make this growth possible. By answering these questions first, a business owner will find it easier to determine the appropriate type of loan needed.

A small business owner should also consider other types of financing, including the following options:

  • Business credit cards
  • Merchant cash advances
  • Invoice factoring
  • Equipment financing
  • Line of credit

In fact, many of these options could be a good fit for a small business. They might even suit a business better than a traditional small business loan, and therefore should not be discounted before fair consideration.

While thinking about different loan options, a small business owner should remember their own financial health. Whatever type of financing a small business owner is considering, poor credit history and financials can make it hard to secure a good deal on a small business loan. These factors can also make it hard to secure affordable interest rates. For this reason, it is important, again, to think about alternative sources of business funding. These alternate kinds of funding can be helpful while a business grows to the point that it may qualify for a traitional loan type.


Approximately 30% of veteran small business owners use their personal savings for investments in capital. Many of these individuals would benefit from taking out a small business loan. While it is true that an individual does not have to pay interest on savings, relying solely on savings can slow a business’ growth in the long-term.

In short, a small business loan is an excellent easy to grow a business, and veteran entrepreneurs should be sure to consider it.

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