The 5 Best Small Business Loans for Veterans
Getting the capital you need to start or grow your business doesn’t have to be difficult. Whether you’re eligible for small business loans through the Small Business Association or other government-backed programs, or are looking to finance your business through private lenders, there are plenty of options available to help ensure your success. To learn more about what types of loans might be right for you, check out our guide to the best small business loans for veterans below.
The SBA Loan
It is often said that the SBA Loan is the best loan option available to veteran small business owners. The 7(a) loan program provides funding to established businesses in all industries, has a low-interest rate and has flexible repayment terms. The application process is straightforward and only takes about an hour to complete.
How Do I Get An SBA Loan?
If you want to use your home as collateral, it is important to note that there are different types of loans that will allow this. The most common type is a home equity loan. This is where you take out a loan against the equity in your home. You can also get what’s known as a second mortgage which is typically offered by traditional banks but not by credit unions or online lenders. Finally, there are also private mortgages and business loans that may allow you to use your property as collateral.
Can I Use My House As Collateral?
Yes! You can use your house as collateral when taking out a small business loan. When you apply for a mortgage, your home equity is counted as an asset that lenders are willing to accept. This means that if you default on the mortgage, the lender will have the right to foreclose and take ownership of your property and sell it in order to recoup their losses. However, they’re not just going to let you walk away from this debt without any consequences. If you don’t pay off the mortgage, or miss payments on your loan, they’ll start foreclosure proceedings and eventually take ownership of the property.
What Are the SBA Loan Requirements?
In order to qualify for the SBA 7(a) loan, applicants must be an owner or co-owner of the business and have at least 51% equity ownership. Applicants must also be 18 years old or older and a citizen of the United States. The loan limit is $5 million, but in some cases, up to $35 million may be obtained with a guarantor. You cannot borrow more than you need and cannot borrow more than your equity share in the company.
What Is The Maximum Amount That I Can Borrow?
The maximum amount that you can borrow is $500,000. The interest rates vary based on the level of certification. There are also two different types of loans available:
1) A one-time loan up to $500,000 with an interest rate between 6-8%
2) A revolving credit line up to $500,000 with an interest rate as low as 4%. For a veteran business owner who wants to take out a loan, the biggest benefit of these loans is that they do not require collateral or personal guarantees and they can be used for any type of business.