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SBA 504 Loans for Veterans: Financial Opportunities for Veteran
Knowledge for Veterans When Applying for an SBA 504 Loan
SBA 504 Loan for Veterans

Knowledge for Veterans When Applying for an SBA 504 Loan

Knowledge for Veterans When Applying for an SBA 504 Loan

After dedicating their lives to serving our country, many veterans find themselves ready to embark on a new mission: entrepreneurship.

As per research conducted by the U.S. Small Business Administration, about one out of every ten veterans owns a business, with at least 442,000 of these veteran-owned businesses employing others. However, a startling statistic reveals that only 45 percent of all veteran-owned businesses generate more than $25,000 annually.

The SBA acts as a guarantor for loans made by recognized financial institutions, facilitating access to capital for businesses that may struggle to secure conventional financing. One of the SBA’s main objectives is to make capital funding accessible to small businesses through its many loan guaranty programs.

Read on to learn more about how SBA 504 loans for veterans can assist veteran business owners in starting and growing their companies.

What is an SBA 504 Loan?

An SBA 504 loan is specifically designed to help small business owners acquire fixed assets, such as land, buildings, and equipment. It can also finance construction, renovations, and equipment upgrades. This type of loan involves a partnership between Certified Development Companies (CDCs) and conventional lenders. When choosing an SBA 504 loan provider, find one with a strong track record and experience in successfully facilitating SBA 504 financing.

Loan Structure

  • 50% Conventional Lender
  • 40% CDC
  • 10% Borrower

Depending on the project’s specifics, the SBA will cover up to 40% of the total, up to $5 or $5.5 million. In comparison, the borrower contributes 10% equity of the loan amount (15% for special-purpose properties) as collateral.

Eligibility Criteria for Veterans

To qualify for special considerations under the SBA’s veteran programs, you need to be one of the following:

  • Veteran
  • Service-disabled veteran
  • Active-duty military participating in the Transition Assistance Program (TAP)
  • Reservist or National Guard member
  • Current spouse of any veteran, active-duty service member, reservist, or National Guard member
  • Widowed spouse of a service member who died while in service or due to a service-connected disability

If you own or control over 50% of a small business, you are eligible for these benefits, corresponding to the specific SBA veteran loan requirements. Additionally, the local community might explore  SBA loan programs for veterans to identify the best financial support options.

Veterans’ Training Opportunities

The SBA offers several programs to support veteran business owners, including:

SCORE Program

The SCORE program trains entrepreneurs at hundreds of locations, offering in-person and long-distance options. Your mentor will stay with you throughout the life of your business.

Small Business Development Centers (SBDCs)

With over 900 centers nationwide, SBDCs provide services tailored to local economic needs.

SBA Office of Veterans Business Development Programs

  • Boots to Business: An entrepreneurial program offered on military installations globally, part of the Department of Defense’s Transition Assistance Program (TAP).
  • Boots to Business Reboot: Extends entrepreneurship training to veterans of all eras in their communities.
  • IVMF – Veteran Women Igniting the Spirit of Entrepreneurship: Includes online training, a conference for women veterans and military spouses, and follow-on mentoring.
  • National Center for Veteran Institute for Procurement: Trains veteran-owned small businesses to succeed in the federal contracting market.
  • Veterans Business Outreach Centers (VBOCs): Located throughout the United States, offering training, mentoring, and other valuable services. Working with SBA 504 lenders can further enhance the chances of obtaining the right loan to support your business aspirations.

Financial Benefits for Veterans

The SBA offers special conditions for service-disabled veterans, including advantages in the 7(a) and 504 loan programs.

SBA Express Loan Program

  • Fast-tracked loans: Up to $350,000
  • Fee waivers: The SBA Veterans Advantage waives the upfront guarantee fee for loans between $150,000 and $350,000.

VetLoan Advantage

  • Loan fee reductions: Created by the CDC trade association NADCO, aimed at reducing loan fees.
  • Cash rebates: For example, financing organizations can offer veterans who own 51% or more of their businesses a specific rebate when their loans are funded.

504 Capital Corporation is Here To Help

Looking for an SBA 504 loan provider in VA? An SBA 504 loan is an excellent option for veterans looking to scale their businesses.

504 Capital Corporation’s Vet Loan Advantage Program offers significant financial benefits. Under this program, 504 Capital Corporation pays half of the third-party lender fee, up to $3,000, and reduces the processing fee to 1% for all veterans and their spouses. This initiative is designed to make the loan process more affordable and accessible for veteran entrepreneurs.

If this option seems right for you and you are wondering how to apply for a veterans small business loan, contact your local CDC for further guidance and assistance. Organizations like 504 Capital Corporation are available to provide the necessary support through every step of the loan process.

Want to learn more about ​​veteran loan requirements?  Contact a CDC Specialist

 

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