Patriot Express Loans were offered by the Small Business Administration (SBA) from 2007 to 2013, when the pilot program ended. Patriot Express Loans offered veteran-owned businesses loans at reduced interest rates and fees, with an expedited approval process. When the program concluded, many of the advantages offered became available through the SBA Express Loan program.
While SBA Patriot Express loans no longer exist, there are other special loan options for veteran-owned businesses. For example, StreetShares offers small business loans and lines of credit up to $250,000 with rates from 7.19% to 29.9% APR. If you have one year of business operations, a credit score of at least 600, and annual revenues exceeding $25,000, you may qualify. Get pre-qualified online in minutes and, if approved, receive funding within two days.
What Patriot Express Loans Were & Good Alternatives
Patriot Express Loans were offered as a pilot program through the Small Business Administration. In their heyday, these loans provided a faster application process with reduced interest rates and guaranteed fees for veteran-owned businesses. Unfortunately, this program ended in 2013. However, there are still loan options available through the SBA and other lenders that provide benefits to veteran-owned businesses.
Alternative small business financing with specific benefits to veteran-owned businesses can be obtained from a variety of sources. Some of the more common alternatives to the Patriot Express Loan program include SBA Express Loans with Veteran Advantage, a Patriot Express Line of Credit through StreetShares, and angel investment funding from providers like Hivers & Strivers.
How Veteran Small Business Loans & Lines of Credit Work
Patriot loans (often referred to as VA business loans or veteran loans) work in the same manner that other small business loans work, with the primary difference being that veteran loans are targeted at veteran-owned businesses. These loans typically offer some additional benefit to veteran-owned businesses, such as reduced interest rates.
While the SBA’s Patriot Express Loan is no longer in existence, there are still opportunities for veteran-owned businesses through the SBA and other lenders. The SBA’s Express Loan program, coupled with its Veteran Advantage program, results in a financing opportunity for veterans that has many of the same benefits that the former Patriot Express Loan program had.
Additionally, other lenders, like StreetShares, are inspired by the tenacity of veteran-owned businesses and have made it their mission to help finance veteran entrepreneurs in their endeavors. Plus, there are other funding options available only to veterans, such as angel investing from a company like Hivers & Strivers.
Who Business Loans for Veterans Are Right For
VA small business loans are typically available to retired and honorably discharged military personnel and those who are actively serving in the military. Some lenders extend the veteran benefits further and include spouses and immediate family members of the veteran as eligible borrowers for their VA small business loan products.
The following types of borrowers are eligible for veteran-owned business loans:
- Retired and honorably discharged military personnel: If you are a retired or honorably discharged military veteran with your own business, or looking to start up your own business, you would meet the veteran qualification for a VA business loan. You will likely need to supply a copy of your DD 214 as proof of veteran status.
- Active duty military personnel (including those actively serving in the National Guard or Reserves): If you are currently serving in the military, and own or plan to start a business, you meet the veteran qualification to be eligible for a VA small business loan.
- Military spouses and immediate family members: Some programs extend their veteran eligibility to the spouses and immediate family members of veterans (either active duty or retired military personnel). Check the veteran qualification requirements for the program that you are interested in to see if this applies.
If you are already operating a veteran-owned business, or you are a veteran considering starting your own business, veteran small business loans are likely a great financing option. Veteran loans offer a unique financing opportunity for veteran-owned businesses by granting cost savings to you as a result of your veteran status.
Costs of Small Business Loans for Veterans
The cost of veteran business loans depends on the type of loan you choose. However, regardless of whether you choose a veteran business loan from the SBA or an online lender, the costs will be less than you’ll pay with a traditional business loan. You can expect to pay interest rates between 7% and 30% APR.
SBA loans offer the least diversity in their interest rates, with rates set to range between 7.75% and 10.25%. If you can meet the qualification requirements for these loans, and are able to wait out the funding period, they will likely be the most affordable option. Online lenders can provide faster funding but have a wider range of interest rates, starting as low as 7% for the most qualified borrowers and extending to greater than 50% APR in some cases.
Veteran-owned Business Loan Providers
There are a number of lenders that offer veteran business loans that provide true benefits to veteran-owned businesses. These lenders understand the value and importance of fostering growth in veteran entrepreneurship. They show their commitment by offering financing options that are exclusive to veteran-owned businesses and supporting military veterans through their businesses.
Top Small Business Loan Providers for Veterans
Three of the top veteran loan providers are:
StreetShares, a veteran-owned online lender, has an affinity for financing other veteran-owned businesses. StreetShares offers small business loans and lines of credit up to $250,000. Interest rates start as low at 7.19%, with repayment terms up to 36 months.
Additionally, StreetShares offers contract financing at rates starting as low as 1%, with no limit on the amount you can finance. For all of their financing options, you can apply online directly through their website.
2. Hivers & Strivers
Hivers & Strivers is an angel investment group that specializes in funding startups that are owned and operated by veterans and military academy graduates. Hivers & Strivers provides an average of $250,000 to veteran-owned businesses in the startup phase of their business endeavor in exchange for an equity stake in the company. To inquire about funding from Hivers & Strivers, you can submit information about your proposed business venture to them through a form on their website.
3. Wells Fargo Bank
Wells Fargo Bank was one of the leading SBA lenders in 2018, having made nearly 4,000 SBA loans totaling nearly $1.2 billion. The SBA Express Loans made through Wells Fargo Bank in 2018 had an average interest rate of 10% and an average repayment term of nine years. To apply for an SBA Express Loan with Veteran Advantage through Wells Fargo, you will need to visit one of their branch locations.
What the SBA Express Loan Program With Veteran Advantage Is
One of the most common Patriot Express Loan alternatives, the SBA Express Loan (a subset of the SBA 7(a) loan program) offers loans up to $350,000 with an expedited approval process. These loans can be used for a variety of business needs, including working capital, inventory, and real estate purchases. SBA Express Loans have interest rates from 10% to 12%, and terms up to 10 years (25 years for real estate and equipment purchases).
The Veteran Advantage waiver offered by the SBA allows veteran-owned businesses to receive these SBA Express Loans without requiring payment of the initial loan guarantee fee. This is a significant savings for the veteran-owned business, as the guarantee fee can be up to 3% of the guaranteed portion of the loan.
The costs, terms, and qualifications for an SBA Express Loan with Veteran Advantage are:
SBA Express Loans for Veterans Costs
Interest rates for SBA Express Loans vary by lender as well as the prime rate. Rates can range anywhere from prime plus 4.5% to prime plus 6.5%, but cannot exceed what a lender would normally charge for a traditional loan. The Veteran Advantage program currently waives the initial guarantee fee that borrowers would typically be required to pay for these SBA loans.
The rates and fees that you can expect with an SBA Express Loan with Veteran Advantage are:
- Interest rate: 10% to 12% (prime plus 4.5% to 6.5%)
- Guarantee fee: $0 (waived with Veteran Advantage)
- Origination fee: 0.5% to 3.5%
- Loan packaging fee: $2,000 to $4,000
The primary benefit of the Veteran Advantage with an SBA Express Loan is the waiver of the guarantee fee. Guarantee fees on SBA Express Loans can range from 2% to 3.5% of the amount borrowed. By utilizing the Veteran Advantage, veteran-owned businesses can realize a significant savings in the cost of capital as compared to non-veteran businesses.
SBA Express Loans for Veterans Terms
The repayment terms for an SBA Express Loan vary depending on the loan use and the collateral used to back the loan. An SBA Express line of credit has a cumulative 10-year repayment period; you are able to draw from the line of credit for the first five years, and repayment occurs for up to five years following. Working capital loans have repayment terms up to ten years and real estate secured loans up to 25 years.
The maximum SBA Express loan terms are:
- Lines of credit: Up to 10 years; you can draw on the line of credit for up to five years, and repayment is termed out over another five years
- Working capital term loans: Up to 10 years
- Equipment loans: 10 years or the useful life of the collateral, whichever is greater (not to exceed 25 years)
- Real estate term loans: Up to 25 years
The repayment terms for SBA Express Loans are the same for veteran-owned businesses as they are for non-veterans. The Veteran Advantage program only offers benefits in terms of costs, while all other aspects of the SBA Express Loan program remain the same.
SBA Express Loan for Veterans Qualifications
To qualify for an SBA Express Loan with Veteran Advantage, you will need to be a qualified veteran (e.g., honorably discharged, active service). Your business will need to have at least two years of business operations, and generate at least $100,000 in annual revenues. Additionally, you will need to have a credit score of at least 680 to qualify.
The minimum qualification requirements that you can expect with an SBA Express Loan are:
- Time in business: At least two years
- Credit score: At least 680 (check your score for free)
- Annual revenue: At least $100,000
- Veteran status: To qualify for the Veteran Advantage, you need to be an honorably discharged veteran, an active duty service member, or current spouse of a veteran
The qualifications for the SBA Express Loan are the same regardless of veteran status. The Veteran Advantage only changes the costs associated with the loan. If you are unable to meet the qualifications for the SBA Express Loan program, a loan from a lender like StreetShares may be a good alternative, as the qualification requirements are more lenient.
Where to Get an SBA Express Loan as a Veteran
An SBA Express Loan with Veteran Advantage is the closest match to the former Patriot Express Loan. Wells Fargo Bank was one of the top 10 SBA lenders in 2018, and has significant experience with making SBA Loans. The average interest rate for SBA Express loans made through Wells Fargo Bank in 2018 was 10%, with an average repayment period of nine years. You can apply by visiting one of their branch locations and meeting with a loan officer.
Alternatives to SBA Loans for Veterans
If you don’t meet the qualification requirements of an SBA Express Loan, there are other opportunities available to veteran-owned businesses. Some credit unions, such as Navy Federal Credit Union, offer small business financing options at competitive interest rates to veterans, their spouses, and their families. Additionally, some online lenders, such as StreetShares, focus primarily on financing veteran-owned businesses.
While interest rates through an online lender may be higher, they typically have more lenient qualification requirements, and can provide fast funding. Whereas a small business loan through a traditional lender, like a credit union, will often have lower interest rates, it may take longer to receive funding.
If you are still in the early startup phase of your business venture, you might also consider approaching an angel investment group for seed money to get your business started.
StreetShares offers non-SBA financing in the form of small business loans and lines of credit, as well as contract financing. With loan and line of credit rates starting as low as 7.19% (1% on contract financing), StreetShares can provide financing up to $250,000 (no limit on contract financing). You can apply online in a matter of minutes and receive funding within two business days.
Pros & Cons of Small Business Loans for Veterans
There are definite benefits associated with veteran small business loans, such as the potential for lower interest rates, reduced or waived lender fees, and the fact that some of these lending opportunities are only available to veterans. However, finding a lender that offers a true advantage to veterans can sometimes be difficult. Plus, despite reduced rates and fees, the overall cost of capital could be costly depending on the option you choose.
Pros of Small Business Loans for Veterans
Some of the benefits of veteran business loans are:
- Reduced interest rates: Some small business loans for veterans offer interest rate reductions for veteran-owned businesses. This can lead to significant savings over the term of a loan.
- Reduced or waived fees: As a veteran-owned small business, you may be eligible for reduced origination or guarantee fees. Depending on the financing product, the fees may be waived entirely.
- Programs are only available to veterans: Some veteran business loans and grants are only available to veteran-owned businesses. This is advantageous to those that qualify, and you can be assured that lenders offering these products understand the challenges that face veteran entrepreneurs.
Cons of Small Business Loans for Veterans
Some negative aspects associated with small business loans for veterans are:
- Finding a lender can be challenging: One of the most difficult challenges of veteran-owned business loans is finding a lender that offers small business loans geared towards veterans, or that offer a veteran advantage on their financing products. While many lenders claim that they have business loans for veterans, their product offering has no differentiation to the products offered to all potential borrowers.
- Cost of financing: While not unique to veteran business loans, the cost of financing a small business loan is a standard negative feature. Depending on the financing product you select, the cost of capital could become burdensome if you aren’t aware of the costs upfront.
StreetShares is a reputable lender that offers a line of credit for veteran-owned businesses, known as a Patriot Express Line of Credit, as well as short-term small business loans. Through both programs, you can borrow up to $250,000 with terms up to 36 months and at interest rates starting as low as 8%. You can apply online and receive funding in as quickly as two days.
Business Resources for Veterans
In addition to loans, there are many business resources available to help veterans make the most of their small businesses. These programs are offered in various locations nationwide and have been established to help veteran-owned businesses succeed (e.g., business plan development, incubation, basic business skills). While there are many potential resources and courses out there, you will need to do some research to ensure that you are selecting a reputable program.
Doug Doan, General Partner of Hivers & Strivers Investment Fund, a company that invests exclusively in companies that are led by military veterans, shares that:
“Navigating minefields is a skill military vets learn on active duty. Good thing too, because for vets hoping to start and build a business, they are almost certainly going to need every bit of their training. One of the biggest minefields is the crowded and confusing space of organizations and for-profit services that advertise their help and advice for military vets hoping to start a business. While there are some terrific and helpful organizations that really do offer help, there is even a larger number that do not.
“Too often, the well-publicized veteran outreach programs are really giant PR campaigns from organizations hoping to convince the public that they have an active interest and intent to help veterans gain the basic knowledge needed to start and run a company. After the big ‘Vet Day’ comes and goes, few veterans hoping to launch their enterprise will have been helped, and almost none of them will be introduced to early-stage capital and investors who are interested in investing in Vet-led companies.
“The good news is that there are exceptions. In particular, the Bunker Labs group is having real success in helping vets fine-tune their business plans and then introducing these companies to investors. Most of the help and advice Bunker provides is free, too.”
Determining which resource groups are viable, and truly aiming to assist veteran-owned businesses to succeed, can seem intimidating. We’ve selected three of the most well-known and established programs to help you get started.
Three reputable business resource programs for veterans are:
1. Bunker Labs
Bunker Labs is a national nonprofit network whose sole purpose is to assist veteran entrepreneurs develop their businesses. They offer supporting programs throughout the various stages of business development, from solidifying your business idea, to incubation of that business idea, and further into the growth and expansion of your business.
2. Patriot Boot Camp
Patriot Boot Camp offers a three-day intensive training to veteran entrepreneurs and their spouses. The training is free and provides guidance on business skills, connects the participants with mentors, and fosters networking with other veteran entrepreneurs.
3. Boots to Business
The Small Business Administration offers an entrepreneurial education and training program called Boots to Business. This program is open to all active duty service members, all military veterans, and their spouses. The course provides the fundamentals of business ownership, including how to develop a business plan.
Alternatives to VA Small Business Loans
There a number of small business financing opportunities beyond those that we have already mentioned. The type of funding that you choose will be largely determined by your specific needs and credit qualifications. SBA 7(a) loans will work well for those needing larger loans, online lenders can provide fast funding, and borrowers with credit issues may be interested in lenders that are willing to overlook credit scores.
Some alternatives to VA small business loans are:
SBA 7(a) Loan
The big brother to the SBA Express Loan, the SBA 7(a) loan can provide funding of up to $5,000,000 at interest rates ranging from 7.75% to 10.25%. You can apply through an SBA approved lender and receive funding in 30 to 90 days. SmartBiz offers an expedited application and funding process for SBA 7(a) loans of up to $350,000. SBA 7(a) loans are an affordable option if you don’t have an immediate need for funding.
Online Small Business Loans
Online lenders offer a variety of small business loans, from short-term loans to invoice factoring. Some of the best online lenders have relatively few qualification requirements and simple application processes, making it easy to get business financing. If you need fast financing, an online lender can get you funded quickly.
Bad Credit Business Loans
If you have less than favorable credit, it can often be difficult to obtain financing, but there are lenders that provide business loans for borrowers with bad credit. These lenders have lower credit requirement thresholds, or do not have a minimum credit score requirement. Interest rates will likely be higher on these loans than on a loan with a higher credit score requirement. You can apply for financing online, and many offer rapid funding.
Patriot Express Loans Frequently Asked Questions (FAQs)
A lot of information has been covered in this article about Patriot Express Loans and other veteran-owned business loan options, including what they are, how they work, finding the right lender, and additional business resources for veterans.
Some frequently asked questions regarding patriot express loans are:
What is an SBA Express Loan?
SBA Express Loans are a subset of the SBA 7(a) program, and are loans up to $350,000 made through a traditional lender and guaranteed by the SBA. Interest rates range from prime plus 4.5% to prime plus 6.5%. SBA Express Loans offer an expedited approval process, often being approved within 36 hours of submission.
Can I get a VA business loan with bad credit?
The majority of VA business loans require a stable credit history and good credit. If you have less than favorable credit, it does not preclude you from being able to obtain financing, but the interest rates may be higher. Businesses with lower credit scores may have more success applying for financing through an alternative lender.
How much can I get for a VA small business loan?
The amount of funding that you can receive through a VA small business loan depends on the type of loan and how well your business meets the qualifications for that loan. For example, an SBA Express Loan with Veteran Advantage allows you to apply for up to $350,000; however, you may qualify for less than that based on your credit and annual revenues.
Although the Patriot Express Loan program no longer exists, there are still a number of loans that offer advantages to veteran-owned businesses. SBA Express Loans with Veteran Advantage are the closest match to what the Patriot Express Loan was. Many other lenders also offer discounted rates and fees to veteran-owned businesses. Use caution when selecting financing aimed at veterans, as some lenders may simply be adding a label to an existing product without offering any additional benefit.
StreetShares, a reputable provider of veteran financing, offers a line of credit for veteran-owned businesses, known as a Patriot Express Line of Credit, as well as term loans. Through both programs, you can borrow up to $250,000 with terms up to 36 months and at interest rates starting as low as 8%. You can apply online and receive funding in as quickly as two business days.