Ultimate Guide to Small Business SBA Loans
Veterans Programs
by Daniel Rung and Matthew Rung
View Table of Contents
View Table of Contents
- Introduction
- Is an SBA loan right for my business situation?
- Understanding SBA Loan Programs
- Preparing for an SBA Loan Application
- SBA Loan Requirements and Eligibility
- SBA Loan Fees and Costs
- The SBA Loan Application Process
- SBA Loan Denials and Appeals
- SBA Loan Servicing and Monitoring
- SBA Loan Compliance and Audits
- SBA Loan Refinancing and Consolidation
- SBA Loan Forgiveness and Debt Relief
- SBA Loan Guaranty Purchase Process
- SBA Loan Portfolio Management
- SBA Loan Programs for Specific Groups
- International Trade and SBA Loans
- Alternative Lenders and SBA Loan Lenders
- SBA Loan Scams and Fraud
- SBA Secondary Market Programs
- SBA Loan Trends and Future Outlook
- Success Stories and Case Studies
- Resources and Tools
- Conclusion
- SBA Veterans Advantage Guaranteed Loans
- SBA Veterans Advantage Fee Relief
SBA Veterans Advantage Guaranteed Loans
Purpose of the Loan Program
The SBA Veterans Advantage Guaranteed Loans program is specifically designed to support veteran-owned small businesses by providing them with easier access to capital. This program aims to honor the service of veterans by offering them reduced fees on SBA 7(a) loans, making it more affordable for veterans to start, purchase, or expand their businesses. By easing the financial burden on veteran entrepreneurs, the SBA seeks to foster economic growth and job creation within the veteran community.
Eligibility Requirements
To qualify for an SBA Veterans Advantage Guaranteed Loan, businesses must meet the following criteria:
- Be a for-profit business operating in the United States
- Meet the SBA’s size standards for small businesses
- Demonstrate good character, credit, management, and ability to repay the loan
- Use the loan for a sound business purpose
- Not have access to other financing on reasonable terms
- At least 51% of the business must be owned and controlled by one or more of the following:
- Honorably discharged veterans
- Service-disabled veterans
- Active duty military service member participating in the military’s Transition Assistance Program (TAP)
- Reservists and/or active National Guard members
- Current spouse of any veteran, active duty service member, reservist, National Guard member, or the widowed spouse of a service member who died while in service or as a result of a service-connected disability
Loan Amounts and Terms
SBA Veterans Advantage Guaranteed Loans offer the following features:
- Maximum loan amount: Up to $5 million (same as standard 7(a) loans)
- Guarantee percentage: Up to 85% for loans up to $150,000 and 75% for loans greater than $150,000
- Interest rates: Negotiated between the borrower and the lender, subject to SBA maximums
- Loan terms:
- Working capital: Up to 10 years
- Equipment: Up to 10 years
- Real estate: Up to 25 years
- Reduced fees:
- Zero upfront guarantee fee for loans up to $150,000
- 50% reduction in the upfront guarantee fee for loans between $150,001 and $500,000
Permitted Uses of Funds
SBA Veterans Advantage Guaranteed Loans can be used for a variety of business purposes, including:
- Starting a new business
- Purchasing an existing business
- Expanding a current business
- Purchasing land or buildings
- Constructing or renovating buildings
- Purchasing equipment, machinery, furniture, fixtures, supplies, or materials
- Acquiring and installing long-term equipment
- Refinancing existing business debt under certain conditions
- Working capital
- Inventory
- Seasonal financing
- Export transactions
It’s important to note that SBA Veterans Advantage Guaranteed Loans cannot be used for:
- Financing floor plan needs
- Purchasing an asset to hold for its potential increased value
- Reimbursing funds owed to any owner
- Repaying delinquent taxes
The SBA Veterans Advantage Guaranteed Loans program provides a valuable opportunity for veteran entrepreneurs to access the capital they need to start or grow their businesses. By offering reduced fees and maintaining the same favorable terms as standard 7(a) loans, this program makes business ownership more accessible and affordable for those who have served our country.
This initiative not only supports individual veteran business owners but also contributes to the broader economic empowerment of the veteran community. It recognizes the unique skills and experiences that veterans bring to entrepreneurship and aims to harness these qualities for economic growth and job creation.
For eligible veterans considering starting or expanding a business, the SBA Veterans Advantage Guaranteed Loans program can be an excellent financing option, potentially saving thousands of dollars in fees while providing the necessary capital to turn their business dreams into reality.
SBA Veterans Advantage Fee Relief
Purpose of the Loan Program
The SBA Veterans Advantage Fee Relief is not a separate loan program but rather a fee reduction initiative designed to make SBA loans more accessible and affordable for veteran entrepreneurs. This program aims to honor and support veterans by reducing the upfront guarantee fees on certain SBA 7(a) loans. By lowering these fees, the SBA seeks to encourage more veteran-owned small businesses to access the capital they need to start, purchase, or expand their operations, thereby promoting economic growth and job creation within the veteran community.
Eligibility Requirements
To qualify for the SBA Veterans Advantage Fee Relief, businesses must meet the following criteria:
- Be eligible for an SBA 7(a) loan
- Meet the SBA’s size standards for small businesses
- Be at least 51% owned and controlled by one or more of the following:
- Honorably discharged veterans
- Service-disabled veterans
- Active duty military service members participating in the Transition Assistance Program (TAP)
- Reservists and/or active National Guard members
- Current spouse of any veteran, active duty service member, reservist, or National Guard member
- Widowed spouse of a service member who died while in service or as a result of a service-connected disability
- Apply for an eligible SBA 7(a) loan
Loan Amounts and Terms
The SBA Veterans Advantage Fee Relief applies to SBA 7(a) loans with the following features:
- Loan amounts: The fee relief applies to loans up to $500,000
- Fee reductions:
- For loans of $150,000 or less: No upfront guarantee fee
- For loans between $150,001 and $500,000: 50% reduction in the upfront guarantee fee
- Interest rates: Set by the lender within SBA maximums, typically based on the prime rate plus a markup rate
- Loan terms: Vary depending on the use of proceeds, generally:
- Working capital: Up to 10 years
- Equipment: Up to 10 years
- Real estate: Up to 25 years
- Guarantee percentage: Up to 85% for loans up to $150,000 and 75% for loans greater than $150,000
Permitted Uses of Funds
Since the SBA Veterans Advantage Fee Relief applies to SBA 7(a) loans, the permitted uses of funds are the same as those for standard 7(a) loans, including:
- Purchasing land or buildings
- Constructing or renovating buildings
- Purchasing equipment, machinery, furniture, fixtures, supplies, or materials
- Long-term working capital
- Refinancing existing business debt under certain conditions
- Purchasing an existing business
- Starting a new business
- Inventory
- Seasonal financing
- Export transactions
It’s important to note that the funds cannot be used for:
- Financing floor plan needs
- Purchasing an asset to hold for its potential increased value
- Reimbursing funds owed to any owner
- Repaying delinquent taxes
The SBA Veterans Advantage Fee Relief initiative is a significant benefit for veteran entrepreneurs seeking SBA 7(a) loans. By reducing or eliminating upfront guarantee fees, this program can save veteran-owned businesses thousands of dollars in startup or expansion costs. This fee relief makes it more financially feasible for veterans to pursue their entrepreneurial goals and contributes to the growth of veteran-owned businesses in the economy.
For eligible veterans, this fee relief can be a deciding factor in making an SBA loan more attractive compared to other financing options. It demonstrates the SBA’s commitment to supporting veteran entrepreneurship and recognizes the unique value that veterans bring to the business world. By reducing financial barriers, the SBA Veterans Advantage Fee Relief helps ensure that those who have served our country have greater opportunities to succeed in their post-military careers as business owners.