U.S. military veterans and reservists have developed personal attributes such as determination, adaptability, and a willingness to take calculated risks. They’ve learned and developed these attributes through study, hard work, implementation, and by experience. These attributes are also the characteristics that make for successful entrepreneurs.
One key hurdle for veterans who want to become business owners is having access to capital. There are many men and women who would want to pursue their lifelong dream of being a business owner, but feel they aren’t able to supply the money or don’t feel like it’ll work out. Thankfully you don’t need to worry anymore, there are many financing options for veterans who are looking to start a business or expand their existing business.
The VA offers business loans in addition to VA mortgage loans. These loans are overseen by the Department of Veterans Affairs and administered by the Small Business Administration. The VA does not originate these loans. The first two loans are the SBA Express Loan Initiative and the SBA 7(a) loan. Veterans can have their upfront fees waived for these loans through the Veteran’s Advantage Program. The third SBA loan for veterans is the Military Reservists Economic Injury Disaster Loan, which provides working capital to businesses whose principal owner or owners are called up for military service. As you can see from the three different options listed above, the SBA wants to help any potential entrepreneurs achieve their dreams through supplying fair loans that can get them started.
Forming a Partnership
The best way for veterans to start a business without going into debt is to build a partnership with family and friends who make an equity investment in the business. This is especially helpful to a veteran who has limited entrepreneurial experience and could use the knowledge of an equity investor who knows how to run a business.
It is often said that no person is an island, meaning that no one is truly alone or isolated. We are all connected to others in many ways. Why not see if those in your network would be willing to put forward a little bit to get you started?
There are dozens, if not hundreds, of products that celebrities, athletes, and other influencers have put their names on, and they tend to fly off the shelves. So, if people you know can support someone they’ve never even met, how much more would they be willing to support you, an active contributor in their lives.
Business Credit Cards
Business credit cards are one of the most common ways to use debt to finance the startup of a business. Traditional lending sources like banks are reluctant to finance startup operations, since they have to be extra careful with the money they can loan out. Business credit cards can provide the veteran with several thousands of dollars in financing and can help build up the veteran’s business credit for future financing needs. It’s not a lot, but in the beginning every little bit helps. These are also incredibly helpful because they tend to be easy to sign up for and easy to manage, since they’re entirely online.
This form of debt financing involves taking a loan from a private lender who charges interest on the loan. The veteran will have an online profile on a social lending website where the investor can assess the risks involved in making a loan to finance a veteran’s business venture. There are many peer-to-peer lending sites that can even loan up to tens of thousands of dollars to help get your business off the ground. This is also helpful because many lenders/investors can all pitch into a single fund or goal, so you can better prioritize which peer-to-peer lenders to pay back over time. There are many responsible ways to ensure loans are repaid and it generally tends to help everyone in the long run.
Some organizations, like Accion, provide veteran-owned businesses with up to $1 million in financing. Non-profits like Accion are independent of the VA and SBA, and can usually provide financing when the business owner is not eligible for a commercial loan. In relation to this, there are many local nonprofits that will give grants to businesses. Many of these grants give people who would have never had the ability to start or continue their business a chance.
These are just a few of the financing options that are available to veterans. The current booming economy is making it easier for veterans to obtain the capital they need to start their business.