Small business loans for veterans

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Launching a small business is running into some tough headwinds. Economic conditions could be creating a credit crunch, a situation where banks may significantly raise their lending standards.

However, there are still success stories to be found in this challenging environment, and a standout group among those successes appears to be U.S. veterans-turned-entrepreneurs. Veterans own almost 2 million businesses and employ over 5 million Americans, according to a Small Business Administration (SBA) study released in 2022. These businesses generate sales of $1.3 trillion.

An earlier report by the SBA found that veterans were twice as likely to start their own business as their civilian counterparts. And it seems the strains of COVID-19 lockdowns and inflation didn’t change that dynamic.

When it comes to veterans, “there has been a surge in entrepreneurship in the U.S. since the pandemic,” according to a recent study conducted by the National Survey of Military Affiliated Entrepreneurs (NSMAE). Read on to learn what factors and qualities have helped veterans succeed as entrepreneurs, what their financing challenges have been, and what veteran loan programs are helping.

Funding Challenges for Veteran-Owned Businesses

A study by the Institute of Veterans and Military Families found that the reasons vets become entrepreneurs include “a desire for independence, flexibility, financial security, and dissatisfaction with the civilian workforce.”

But no matter how well suited they are to launch a business, a veteran still has to put together the money to get it off the ground and run the business–and that’s not a cinch for anyone.The NSMAE said that 96% of veteran-owned businesses required start-up capital for their businesses. Of these:

  • 59% required less than $25,000 of funding
  • 21% required between $25,000 and $99,000
  • 20% required more than $100,000

Among this group, 92% said that once they had launched, they needed funding to expand or grow their business. However, small business loans were not always obtainable.In the study, 54% said they applied for credit or financing with a lender or creditor. When that happened:

  • 60% were approved by the lender or creditor
  • 8% obtained partial funding
  • 32% were declined (of these, 62% did not reapply anywhere)

To succeed, these small business owners often could use some help. Programs for veteran entrepreneurs include the Entrepreneurship Boot Camp for Veterans (EBV), Boots to Business (B2B), Veteran Entrepreneurship Program (VEP), Bunker Labs, and VBOCs.

The SBA’s Office of Veterans Business Development (OVBD) acts as the liaison between SBA’s network of district offices, resource partners, and collaborating Veteran Service Organizations to support veteran entrepreneurs through expanding access to capital and markets.

Small Business Loans for Veterans

Government agencies and nonprofit organizations exist to coordinate or supply financing for veteran-owned businesses. Chief among them is the SBA.

SBA Veterans Advantage Program

The SBA offers a variety of loan programs that people can apply to in hopes of acquiring capital to start or grow in business. Online training courses and counseling are delivered through SBA’s network of resource partners to help veterans become lender-ready. 

The Veterans Advantage Program works with the SBA 7 (a) and SBA Express loans to provide an extra benefit and thus remove barriers to success for veterans.

SBA 7(a) Loan

Government-backed loans for up to $5 million can be used for almost any business-related costs, including purchasing commercial real estate. If you qualify, the Veterans Advantage can be applied to SBA 7(a) loans to reduce or remove loan fees.

For the “fee relief,” the SBA utilizes a credit scoring model to help reduce underwriting costs and processing time. 

To learn more about the SBA Veterans Advantage Fee Relief initiative, contact your local SBA District Office which can be located online.

SBA Express Loan

These small business loans, offered by banks, credit unions, and other approved lenders, come with an application review time of 36 hours and offer a maximum loan amount of $500,000. The SBA Express loans can help veteran-owned small businesses in need of immediate funding. Again, with the Veterans Advantage program, qualified borrowers can save some cash with reduced loan fees. 

Military Reservists Economic Injury Disaster Loans

The SBA also offers a Military Reservists Economic Injury Disaster Loan (MREIDL). This can be used by any eligible company that cannot meet its normal operating expenses because an essential employee is called to active duty as a reservist. 

The program offers loans of up to $350,000 to veteran-owned businesses. The loans can be used for a variety of purposes, including working capital, equipment purchases, and real estate.

Veteran Small Business Certification

A new program that could provide key assistance to veteran businesses is Veteran Small Business Certification. Once certified, such businesses can compete for federal contracts, pursuing sole-source and set-aside contracts at the Department of Veterans Affairs under the VA’s Vets First Program.

All federal government purchases between $10,000 and $250,000 are automatically set aside for small businesses, as long as there are at least two companies that can provide the product or service at a fair and reasonable price.

If you are certified as a veteran-owned small business (VOSB), you are ready to compete. Also you can be certified as service-disabled veteran-owned (SDVOSB). At least 3% of all federal contracting dollars each year are set aside specifically for certified SDVOSBs. 

To establish an SBA account and apply for certification, visit the Veteran Small Business Certification portal.Through the application portal, you will be able to:

  • Access checklists and pre-application guides
  • Check your firm’s eligibility
  • Request information
  • Create an account, log in, and proceed with an application
  • Search for a certified VOSB or SDVOSB

The Takeaway

Veterans are pursuing small business opportunities with zeal. Like any other entrepreneur, they could use help getting financing. Along with the Veteran Advantage Program, veterans can get certified and compete for federal contracts, pursuing sole-source and set-aside contracts at the Department of Veterans Affairs under the VA’s Vets First Program.

The best & worst states for US veterans

The best & worst states for US veterans

Military service is tough and taxing, and many service members hope for an effortless re-entry into a civilian lifestyle.

But where veterans settle down after their service could play a big role in how smooth that transition really is. Even if they’re a couple years (or decades) out from their period of military service, the frequent moves of a military lifestyle means veterans could be less daunted by the prospect of relocating for a better quality of life.

We wanted to identify the best states for veterans, where they are more likely to find better opportunities and outcomes. We surveyed and ranked each city on several factors relevant to U.S. veterans:

  • Veteran population, both currently and in projected changes.
  • Veterans Affairs (VA) administration score, calculated based on the number of VA centers per enrollees in the state and patient ratings of these local VA facilities.
  • Veterans’ economic outcomes, measured by the median income for veterans, unemployment rates for veterans in the workforce and the median annual property taxes for home-owning veterans.

Here’s a look at our findings on the best states for veterans, and the worst.

Drazen Zigic / istockphoto

To determine which states were best for veterans, we looked at eight metrics broken into three categories:

  • Veteran population score. This includes the percentage of the state’s adult population who are veterans and year-over-year change in the number of veterans, as predicted by the Department of Veterans Affairs. This indicates how attractive states are to veterans, and also suggests that the specific needs of veterans are more likely to be considered as a matter of state policy and community priority.
  • Veterans Affairs administration score. This includes the number of inpatient, outpatient and VA centers per 100,000 VA enrollees and patient ratings for VA primary care providers and specialist providers. The quality and availability of VA care is a major concern for all Americans, but it’s clear from the data that veterans have very different experiences in different states.
  • Economic score. This includes the median income for veterans, the veteran unemployment rates and the median property tax bill for veterans who own their homes. Some state, county and local governments offer special property tax rates, depending on a variety of factors, such as disability or combat status.

KatarzynaBialasiewicz / istockphoto

The best states for veterans have large veteran communities compared to other states. This is an important factor as the percentage of Americans who are veterans fell from 18% in 1980 to just 7% in 2016, per the Pew Research Center.

High-quality VA services
The top states for veterans also provide a higher quantity and quality of VA health care and services.

More economic advantages
Lastly, the best states for veterans provide these residents with better employment opportunities and ease the financial burdens of homeownership.

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The previous factors add up to better access to favorable financial conditions for veterans that can help them get ahead. Combine these with a robust veteran community and reliable VA services, and it’s clear how the following 10 states provide veterans with a leg up in life.

vadimguzhva / istockphoto

Total score: 47.5

VA score: 19.5

Median income for vets: $37,948

Unemployment rate for vets: 3.8%

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Total score: 48.5

VA score: 34.3

Median income for vets: $39,031

Unemployment rate for vets: 4.7%

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Total score: 48.8

VA score: 46.2

Median income for vets: $40,272

Unemployment rate for vets: 2.9%

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Total score: 49

VA score: 50.8

Median income for vets: $33,612

Unemployment rate for vets: 5.3%

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Total score: 49.2

VA score: 28.5

Median income for vets: $43,987

Unemployment rate for vets: 4.0%

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Total score: 49.9

VA score: 41.7

Median income for vets: $41,810

Unemployment rate for vets: 4.7%

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Total score: 50.1

VA score: 32.3

Median income for vets: $37,729

Unemployment rate for vets: 3.8%

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Total score: 51.0

VA score: 29.1

Median income for vets: $37,959

Unemployment rate for vets: 4.5%

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Total score: 51.4

VA score: 56.0

Median income for vets: $36,545

Unemployment rate for vets: 2.0%

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Total score: 53.1

VA score: 47.7

Median income for vets: $34,905

Unemployment rate for vets: 4.0%

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Total score: 53.4

VA score: 52.1

Median income for vets: $38,035

Unemployment rate for vets: 3.0%

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Total score: 55.7

VA score: 64.0

Median income for vets: $36,279

Unemployment rate for vets: 2.4%

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Total score: 56.9

VA score: 69.2

Median income for vets: $38,955

Unemployment rate for vets: 5.6%

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Veterans in Vermont love their VA services more than any other state.

Total score: 57.6

VA score: 91.3

Median income for vets: $36,863

Unemployment rate for vets: 2.2%

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Total score: 60.4

VA score: 54.5

Median income for vets: $36,863

Unemployment rate for vets: 2.4%

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Virginia boasts the highest incomes for veterans, most likely due to lucrative Department of Defense contractor opportunities.

Total score: 62.5

VA score: 36.1

Median income for vets: $53,435

Unemployment rate for vets: 2.7%

EvgeniyShkolenko / istockphoto

Alaska is the state where you’re most likely to have a vet as a neighbor. Thirteen percent of adults residing in Alaska have served in the Armed Forces, and it’s the only state where the Department of Veterans Affairs doesn’t expect the veteran population to shrink.

Total score: 66.9

VA score: 52.4

Median income for vets: $53,023

Unemployment rate for vets: 6.5%

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Wyoming isn’t a star in any specific category, it performs solidly across the metrics we considered.

Total score: 67.1

VA score: 60.1

Median income for vets: $40,655

Unemployment rate for vets: 2.8%

Roberto Galan / istockphoto

Economic opportunities for veterans in Hawaii are among the best (and the weather can’t hurt either!).

Total score: 67.7

VA score: 56.5

Median income for vets: $46,599

Unemployment rate for vets: 2.7%

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North Dakota takes the top spot with a final score of 67.9, thanks mostly to a deep satisfaction with VA services.

Total score: 67.9

VA score: 89.6

Median income for vets: $42,885

Unemployment rate for vets: 4.7%

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Here’s a look at the 10 worst states and the factors that pushed them to the bottom of the pack.

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Total score: 43.0

VA score: 14.7

Median income for vets: $39,782

Unemployment rate for vets: 4.2%

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Total score: 42.4

VA score: 38.2

Median income for vets: $36,984

Unemployment rate for vets: 5.0%

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Total score: 42.4

VA score: 35.4

Median income for vets: $35,981

Unemployment rate for vets: 4.1%

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Total score: 41.7

VA score: 49.7

Median income for vets: $39,626

Unemployment rate for vets: 3.9%

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Total score: 41.4

VA score: 65.7

Median income for vets: $38,163

Unemployment rate for vets: 3.9%

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Total score: 41.3

VA score: 26.5

Median income for vets: $33,986

Unemployment rate for vets: 5.0%

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Total score: 39.7

VA score: 23.2

Median income for vets: $36,091

Unemployment rate for vets: 5.5%

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Total score: 39.6

VA score: 43.2

Median income for vets: $35,786

Unemployment rate for vets: 4.2%

Roberto Galan

Total score: 39.3

VA score: 58.9

Median income for vets: $44,394

Unemployment rate for vets: 3.5%

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Total score: 39.2

VA score: 58.1

Median income for vets: $35,981

Unemployment rate for vets: 4.9%

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Total score: 37.7

VA score: 63.1

Median income for vets: $41,385

Unemployment rate for vets: 3.5%

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Total score: 37.4

VA score: 45.3

Median income for vets: $36,137

Unemployment rate for vets: 3.8%

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Total score: 37.3

VA score: 14.9

Median income for vets: $41,903

Unemployment rate for vets: 4.5%

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Tennessee and Texas had the lowest VA services scores. Texas had the fewest VA facilities per capita among the worst states, at just 11.8 per 100,000 VA enrollees. Meanwhile, Tennessee had some of the lowest VA patient satisfaction ratings.

Total score: 36.0

VA score: 7.7

Median income for vets: $36,183

Unemployment rate for vets: 4.9%

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Total score: 33.0

VA score: 38.2

Median income for vets: $36,132

Unemployment rate for vets: 4.4%

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Total score: 32.0

VA score: 28.0

Median income for vets: $36,197

Unemployment rate for vets: 5.9%

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Total score: 29.9

VA score: 39.5

Median income for vets: $39,596

Unemployment rate for vets: 5.0%

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Total score: 29.9

VA score: 32.1

Median income for vets: $43,342

Unemployment rate for vets: 5.2%

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Total score: 28.1

VA score: 53.0

Median income for vets: $39,453

Unemployment rate for vets: 5.0%

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New Jersey and New York have the smallest veterans communities, accounting for less than 6% of each state’s populations. New Jersey also had the fastest-declining veteran population, shrinking by 3.7% per year.

New Jersey, Oregon and New York fared the worst among our measures of local veterans’ economic opportunities, but New Jersey was the standout. Of the worst states, New Jersey had the highest unemployment rate among veteran workers at 6.2%. Veterans in New Jersey also faced sky-high property taxes, with a median of $7,000 to $7,999 — a full 16% of the state’s $43,994 annual median income among veterans.

Total score: 22.8

VA score: 46.6

Median income for vets: $43,994

Unemployment rate for vets: 6.2%

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For veterans, making ends meet isn’t always easy. As a veteran, one of the first places to turn for financial help is your service-related benefits and perks. Take full advantage of the benefits and entitlements you earned through your military service:

  • The VA offers comprehensive health care and coverage for veterans.
  • Veterans who become disabled in combat are also entitled to additional benefits and assistance.
  • The Post-9/11 GI Bill provides financial assistance for education and living costs for up to 36 months for veterans enrolled in college or a vocational training or certification program.
  • VA loans may help many veterans access an affordable mortgage to purchase a home with little or no down payment.
  • Many states also offer benefits to their local veterans, from a tax break on your military retirement income to additional housing assistance for disabled veterans. Check with your state’s veterans department to see what local benefits are available.
  • Many nonprofits provide additional assistance and grants to vets, such as USA Cares,The American Legion and Veterans of Foreign Wars.

Debt can also be a major burden on veterans, with 92.5% of military and veteran families reporting they had debt, according to the Military Family Advisory Network. Here are some tips for veterans to deal with debt.

  • Seek out debt assistance programs for veterans. These can offer relief and help to military members and veterans burdened by debt.
  • Veterans who can afford to do so can make extra payments to get out of debt faster. This will pay down balances faster, save hundreds or even thousands of dollars in interest, and shave months or years off of the repayment period.
  • Debt consolidation can also be an option to manage debt, especially if you have high-interest debt (credit card balances, for example). Use a new credit account, like a personal loan or a new credit card with a 0% introductory APR, to pay off and replace existing debt. If debt can be consolidated to a lower rate, this can help lower interest to make monthly payments more affordable or help pay off debt faster.

In addition to using veteran benefits and managing debt, veterans can look for other steps to shore up their finances. Saving an emergency fund can be a wise next step, as well as ramping up retirement contributions and improving financial literacy.

Wherever veterans live, they can use this study to see how favorable their state is for their demographic. Short of moving, however, the best thing they can do for their money is to actively manage it and build financial security.

This article originally appeared on MagnifyMoney.com and was syndicated by MediaFeed.org.

gradyreese

” bernardbodo”

Featured Image Credit: Drazen Zigic/istockphoto.

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