6 Best Small Business Loans for Veterans 2020

You’ve served our country, and now you need a loan for your small business. We’ve identified the six best small business loans for veterans. Whether you need seed money for a startup or a short-term loan for working capital, these loans are set up with features and benefits specifically for veteran-owned businesses.

Top 6 Small Business Loans for Veterans 2020

StreetShares: Best Overall Small Business Loan for Veterans

StreetShares is highly dedicated to veteran-owned businesses; it offers small business loans and lines of credit up to $250,000 as well as contract financing. Its interest rates range from 7.19% to 29.9% APR, making this lender competitive even with the low rates offered by most traditional banks. If approved, you can receive funding in as few as two days.

StreetShares Veteran Business Loan Costs

StreetShares offers small business loans and lines of credit to veteran-owned businesses with APRs ranging from 8% to 39.5%. StreetShares charges a loan origination fee ranging between 3.95% and 4.95% of the loan amount. Additionally, StreetShares offers contract financing starting at rates as low as 1% per month.

The rates and fees for business loans from StreetShares are:

• Expected APR: 8% to 39.5% (starting at 1% for contract financing)
• Origination fee: 3.95% to 4.95%
• Prepayment penalty: None

The interest rates charged by StreetShares are in line with, and competitive to, the other lenders on our list. Only Chase offers a lower APR range of 4% to 13%, as would be expected from a traditional bank, due to the fact that traditional banks have more restrictive qualification requirements. The more restrictive the qualifications, the less risk to the lender, which allows for lower interest charges.

StreetShares Veteran Business Loan Terms

StreetShares offers small business loans and lines of credit to veterans in amounts up to $250,000. The repayment terms for both their loans and lines of credit range from three months to three years. Additionally, StreetShares offers unlimited contract financing with a 90% advance rate on your business-to-business (B2B) and business-to-government (B2G) contract invoices.

The loan terms you can expect with a small business loan from StreetShares are:

• Loan amount: $5,000 to $250,000 (no limit for contract financing)
• Loan term: Three months to three years
• Repayment schedule: Weekly

Unlike the other lenders on our list, StreetShares requires weekly payments. All of the other lenders have monthly payments. If you prefer making payments less frequently, you may want to consider one of the other options on our list. However, weekly payments are standard with many online business lenders.

StreetShares Veteran Business Loan Qualifications

StreetShares has very lenient minimum qualification requirements for its loans, which makes them a good fit for most small business borrowers. To qualify, your business needs to have been operational for at least one year, be generating at least $25,000 in annual revenues, and you need to have a credit score of at least 600.

The minimum qualification requirements for a business loan from StreetShares are:

• Time in business: At least one year
• Minimum credit score: 600
• Gross annual revenues: $25,000

Aside from Hivers & Strivers and PenFed Foundation, which fund startups, StreetShares has the lowest annual revenue requirements of any of the lenders on our list. Accion requires $180,000 in gross annual revenues, and Chase and Navy Federal Credit Union likely have similar requirements.

Accion: Best for Veterans Needing up to $1 Million From an Online Lender

For veteran-owned small businesses needing higher loan amounts, Accion has one the highest maximum loan amounts (up to $1 million) of all of the best small business loans for veterans on our list. Interest rates range from 7% to 34% APR, with loan terms ranging from one to five years. When you apply for a loan from Accion, you will work with a loan expert who will help match your needs and qualifications with a loan product.

Accion Veteran Business Loan Costs

A small business loan from Accion will have an interest rate ranging from 7% to 34%. Included in this APR is a loan origination fee that ranges from 3% to 5%, and an additional one-time loan processing fee of $135. Accion has no prepayment penalty, so you can save by paying your loan off in advance.

The rates and fees that you can anticipate with a small business loan for veterans from Accion are:

• Expected APR: 7% to 34% fixed
• Origination fee: 3% to 5%
• Loan processing fee: $135
• Prepayment penalty: None

Accion is the only lender on our list that charges both a loan processing fee and a loan origination fee. However, the overall APR range of 7% to 34% is in line with other lenders, and closely matches StreetShares’ APR range of 7.19% to 29.9%.

Accion Veteran Business Loan Terms

Accion offers small business loans for veterans in amounts ranging from $300 to $1 million. These loans have monthly payments and repayment terms of up to five years.

The loan terms that you can expect with a small business loan from Accion are:

• Loan amount: $300 to $1,000,000
• Loan term: Up to five years
• Repayment schedule: Monthly

Accion offers the widest range of loan amounts, and one of the highest maximum loan amounts available. The only other lender on our list that offers loans up to $1 million is Chase, with the next highest being StreetShares at $250,000.

Accion Veteran Business Loan Qualifications

To qualify for a small business loan for veterans from Accion, your business needs to have been operational for at least six months. Beyond that, the business owners need to have a personal credit score of at least 575, and your business needs to be producing annual revenues of at least $180,000.

The basic qualification requirements you can expect for a small business loan from Accion are:

• Time in business: At least six months
• Minimum credit score: 575
• Gross annual revenues: $180,000

Accion has a lower time in business requirement than StreetShares, six months compared to one year, and a lower credit score requirement of 575 or higher versus StreetShares’ 600 or higher. However, while StreetShares only requires annual revenues of $25,000, Accion requires you to have $180,000 in annual revenues.

Navy Federal Credit Union: Best Small Business Loans for Members

To receive a small business loan through Navy Federal Credit Union, you must be a member. If you are not already a member, you can open a Navy Federal account online to gain membership. Membership is open to veterans and their families nationwide, making veteran-owned businesses also eligible. Navy Federal Credit Union offers small business loans of up to $100,000 at interest rates ranging from 11% to 18% APR, with terms up to five years.

Navy Federal Credit Union Veteran Business Loan Costs

With a small business loan for veterans from Navy Federal Credit Union, you can expect to pay an interest rate in the range of 11% to 18% APR. Navy Federal Credit Union does not report that they charge any origination fees, nor do they charge any penalties for early payoff.

The rates and fees for a business loan for veterans from Navy Federal Credit Union are:

• Expected APR: 11% to 18% fixed
• Origination fee: None
• Prepayment penalty: None

Interest rates on small business loans for veterans through Navy Federal Credit Union fall in the middle range of the lenders that we reviewed. While StreetShares and Accion both have APRs that extend beyond the high APR for Navy Federal Credit Union, they also have the potential to have lower rates than Navy Federal Credit Union as well.

Navy Federal Credit Union Veteran Business Loan Terms

For veterans who are Navy Federal Credit Union members, the credit union offers small business loans in amounts ranging from $2,500 to $100,000. These loans have monthly payments and loan terms of up to five years.

The loan terms for a business loan for veterans from Navy Federal Credit Union are:

• Loan amount: $2,500 to $100,000
• Loan term: Up to five years
• Repayment schedule: Monthly

Of the four direct lenders on our list, Navy Federal Credit Union has the lowest maximum small business loan amount, at $100,000. StreetShares offers loans up to $250,000, while Accion and Chase offer loans up to $1,000,000.

Navy Federal Credit Union Veteran Business Loan Qualifications

While Navy Federal Credit Union does not list a specific value for required gross annual revenue, they will want to see that you have a debt service coverage ratio of 1.25x or better, a full year of business operations, and a credit score of 650 or higher. To obtain a business loan from Navy Federal Credit Union, you will need to be a credit union member, which can be accomplished by opening a deposit account.

The loan qualifications for a business loan for veterans from Navy Federal Credit Union are:

• Time in business: At least one year
• Minimum credit score: 650
• Debt service coverage ratio: At least 1.25x

Traditional banks and credit unions often have more restrictive borrower qualification metrics than online lenders, which is why you will often see that they offer lower interest rates. Navy Federal Credit Union’s qualification requirements fall in line with Chase, the other traditional lender on our list.

Chase: Best for Traditional Bank Financing

If you prefer doing your business banking in person with a traditional bank, Chase offers business loans for veterans in amounts from $10,000 to $1 million. Chase business loans offer interest rates from 4% to 13% APR, with terms of one to seven years. If you have one year of business operations and a credit score of 650 or higher, you may qualify. Additionally, Chase is one of the top SBA lenders for 2019.

Chase Veteran Business Loan Costs

With a small business loan for veterans from Chase, you can expect an APR ranging from 4% to 13%. Interest rates can be either fixed or variable, depending on your loan agreement. Additionally, Chase offers a discount to veteran-owned businesses of up to $500 off their origination fee, which ranges from 3% to 5% of the amount borrowed.

The rates and fees that you can expect with a small business loan from Chase are:

• Expected APR: 4% to 13% fixed or variable
• Origination fee: 3% to 5% (less the veteran discount of up to $500)
• Prepayment penalty: None

Chase offers the lowest overall APR range of any of the providers on our list, with Navy Federal Credit Union being second with its APR range of 11% to 18%. Both StreetShares and Accion have APRs as low as 7%, but the higher end of the range exceeds both Chase and Navy Federal Credit Union.

Chase Veteran Business Loan Terms

Chase offers small business loans for veterans in amounts ranging from $10,000 to $1 million. For amounts less than $10,000, they recommend applying for one of their business credit cards instead of a loan. Chase’s loan terms range from one to seven years.

The terms that you can expect with a small business loan for veterans from Chase are:

• Loan amount: $10,000 to $1 million
• Loan term: One to seven years
• Repayment schedule: Monthly

With loan terms extending up to seven years, Chase has the longest potential repayment term of any of the lenders on our list. Both Accion and Navy Federal Credit Union have shorter maximum terms, capping out at five years.

Chase Veteran Business Loan Qualifications

To qualify for a small business loan for veterans from Chase, you need to have a credit score of at least 650 and one full year of business operations. Chase does not list the specific annual revenue requirements for small business loans, but you will need to have a debt service coverage ratio of 1.25x or better.

The qualification requirements that you can expect with a small business loan for veterans from Chase are:

• Time in business: At least one year
• Minimum credit score: 650
• Debt service coverage ratio: At least 1.25x

As a traditional bank, Chase has higher credit requirements than other lenders that were reviewed. StreetShares requires a credit score of 600 or higher, and Accion only requires a credit score of 575 or higher.

Hivers & Strivers: Best for Businesses Seeking an Angel Investor

Unlike the other companies on our list, Hivers & Strivers is not a lender, but rather an angel investment group that believes strongly in supporting veteran-owned businesses. Hivers & Strivers provides an average of $250,000 to veteran-owned businesses nationwide in the startup phase in exchange for an equity stake in the company, meaning that Hivers & Strivers will become a partial owner of your company.

Hivers & Strivers Veteran Business Funding Costs

Unlike a loan offered by a lender, funding from Hivers & Strivers does not have an interest rate and does not require traditional repayment. Instead, with an investment from Hivers & Strivers, you offer an equity stake (or partial ownership) in your business. This means that Hivers & Strivers will own a percentage of your business, and therefore be entitled to a portion of your profits if and when the investment company decides to cash out.

Hivers & Strivers Veteran Business Funding Terms

Hivers & Strivers offers non-recourse funding for your veteran-owned business startup, which means in the event that your business fails, you do not need to repay the money. Because the investment group holds an equity stake in your business, it will only make money if your business is profitable. To help ensure that you are operating profitably, Hivers & Strivers will have a presence on your board and help guide your business.

Having a representative from Hivers & Strivers on your board can be advantageous to your business, as they will bring experience to the table and may be able to guide you away from making common business mistakes. However, this also means that you have to get board approval to make decisions that impact your business, which may be a dissuading factor in choosing this type of funding.

Hivers & Strivers Veteran Business Funding Qualifications

To qualify for investment funding from Hivers & Strivers, your business must be owned and operated by a military veteran. Hivers & Strivers believes that veterans make the strongest business owners, and only provide funding to veteran-owned businesses. Hivers & Strivers will want to review and discuss your business proposal, your cash flow projections, and your business plan to make an informed decision as to whether or not to invest in your company.

PenFed Foundation: Businesses Aimed to Scale Quickly

A unique small business financing opportunity for veteran-owned businesses, the PenFed Foundation offers a Veteran Entrepreneur Investment Program. This program provides financial assistance nationally to startup veteran-owned businesses by way of an equity stake or convertible note. To qualify, your business must be majority veteran-owned (50.1% or greater veteran ownership).

PenFed Foundation Veteran Business Financing Costs

There are no specified rates and fees for financing received from the PenFed Foundation through its Veteran Entrepreneur Investment Program. Each financing opportunity is evaluated independently by the board of the PenFed Foundation to determine the best financing option for the veteran-owned business and the foundation.

The PenFed Foundation operates very similarly to Hivers & Strivers in that rather than simply lending your veteran-owned small business money, the foundation invests in you and your business. In some cases, like an angel investment firm, the PenFed Foundation may take an equity stake in your business. By taking an equity stake, the PenFed Foundation will become a partial owner of your company.

PenFed Foundation Veteran Business Financing Terms

Rather than issue a term loan, PenFed Foundation invests money into your company. In return, they will claim an equity stake or issue a convertible note (which can later be converted into an equity payout). Therefore, if you are fortunate enough to have PenFed Foundation invest in your company, you will not have any immediate repayment of funds.

This exchange of capital for business equity is similar to Hivers & Strivers. It varies from the other providers that issue funding in the form of a loan that requires regular payments until the amount is repaid. While there’s no recurring cost to you, as there would be with a loan payment, when your business becomes successful and profitable, the investor may choose to cash out their equity percentage.

PenFed Foundation Veteran Business Financing Qualifications

The only hard-and-fast qualification requirement that PenFed Foundation has for its financing is that the business must be majority veteran-owned (50.1% or greater). Financing decisions are then based on the feasibility of your business proposal and review by their board. You will likely be asked to provide a copy of your business proposal or pitch deck.

In this regard, PenFed Foundation is very similar to Hivers & Strivers in that it is evaluating the strength of your business idea and your potential to succeed. Because these organizations are providing seed and startup funding and investing in your business, they only make money if you are successful in your venture. To increase your chances of being funded, you will need to have a well-developed business proposal and business plan.

Bottom Line

While many lenders claim to make business loans to veterans, the loans they offer are no different than the ones that they offer to non-veterans. We have searched to find the best small business loans for veterans that either offer an additional benefit to veterans or invest only in veterans.