Finding a small-business loan is hard for any entrepreneur. Bad credit, limited time in business and a lack of collateral are all obstacles that small businesses may face. Getting financing can be even more difficult for U.S. military veterans, whose financial history may have gaps because of time devoted to active duty.
Despite these challenges, many veterans decide to become their own boss after serving their country. About 1 in 7 veterans is self-employed or a small-business owner, according to the Institute for Veterans and Military Families at Syracuse University.
To help you clear the financing hurdle, we’ve rounded up some of the best small-business loan options online for veteran entrepreneurs based on time in business and personal credit score:
If you have less than a year in business
Startups with less than a year of operating history will have a tough time obtaining small-business loans. Lenders generally prefer to do business with established firms that have strong cash flow, and this often disqualifies startups. However, you’re not completely out of luck: there are still a few ways you can finance yours. Here are six potential startup financing options.
For veterans with a 500+ credit score
Kabbage offers a line of credit that doesn’t require a minimum credit score to qualify. You will need, however, at least $50,000 in annual revenue. If your credit score is 500 or higher and your business generates at least $100,000 in annual revenue, you could get a less expensive loan with OnDeck. OnDeck offers an annual percentage rate ranging from 9% to 99%, compared with 24% to 99% at Kabbage.
- Loan amount: $2,000 to $100,000
- APR: 24% to 99%
- Loan term: Six or 12 months
- Funding time: A few minutes to several days
- Read our Kabbage review.
- Loan amount: $5,000 to $500,000
- APR: 9% to 99%
- Loan term: Repaid daily or weekly for three to 36 months
- Funding time: As fast as 24 hours but typically a few days
- Read our OnDeck review.
If you have shaky credit and your business has unpaid customer invoices, consider invoice financing from Fundbox. The lender provides loans up to $100,000 against invoices you’re waiting for customers to pay. The loans are repaid in 12 or 24 weekly installments, and APRs range from 16.4% to 76.5%. You can lower your APR by repaying the advance earlier. Fundbox is an option for bad credit borrowers; there’s no minimum credit score requirement. You’ll just need to connect a compatible online accounting software, such as QuickBooks, FreshBooks or Xero, to your Fundbox account.
BlueVine’s invoice factoring is an option if you need to borrow a larger amount. The lender requires a minimum credit score of 530 and at least $120,000 in annual revenue. But it offers financing up to $2 million, compared with Fundbox’s $100,000 limit.
The funding process works a bit differently for each lender. Fundbox funds the full approved loan amount upfront, repaid weekly over 12 or 24 weeks. BlueVine advances you 85% of an invoice amount upfront and the rest when your customer pays you, minus fees. BlueVine APRs range from 17% to 60%.
- Loan amount: $1,000 to $100,000
- APR: 16.4% to 67.7% for 12 weeks; 18.5% to 76.5% for 24 weeks
- Loan term: Equal repayments over 12 or 24 weeks
- Funding time: One to three business days
- Read our Fundbox review.
For veterans with a 600+ credit score
If you’re looking for the lowest rates and longest repayment terms: SmartBiz
If you have an established business and good personal credit, SmartBiz has the lowest borrowing costs among online lenders, with APRs between 8% and 8.7%.
The lender provides Small Business Administration loans for businesses with strong finances. With a repayment term of 10 years, SmartBiz is a good choice for an expansion, buying equipment, refinancing high-interest debt or acquiring another business.
To qualify, you need at least two years in business, a minimum of $50,000 in annual revenue and at least a 600 personal credit score for loans of $30,000 to $150,000. For loans of up to $350,000, SmartBiz requires at least a 650 personal credit score. Besides these requirements, you must be eligible for SBA loans and meet the SBA’s stringent requirements, including providing about a dozen documents. For purchasing real estate, SmartBiz offers a separate commercial real estate loan.
- Loan amount: $30,000 to $350,000
- APR: 8% to 8.7%
- Loan term: 10 years
- Funding time: As quickly as seven days but typically several weeks
- Read our SmartBiz review.
If you’re looking for faster funding with low rates: Bond Street and Credibility Capital
Bond Street and Credibility Capital have similar requirements to SmartBiz, but they are options for borrowers who need faster funding.
Bond Street loans are funded within just three to four days on average, with APRs ranging from 8% to 25%. However, you’ll still need strong personal credit (640 minimum) and annual revenue (at least $250,000), and at least two years of business history to qualify. The loans carry much shorter repayment periods than SmartBiz — up to three years — and are repaid twice a month, so borrowers should expect larger and more frequent payments.
Funding at Credibility Capital takes a bit longer than at Bond Street; loans are funded within seven days on average. They max out at $350,000, compared with $1 million at Bond Street, and the APR range is similar at 10% to 25%. However, Credibility Capital has slightly looser annual revenue and time in business requirements. Borrowers need a minimum of $100,000 revenue and one year in business to qualify. You can’t have had any bankruptcies in the past five years, which is two years shorter than Bond Street’s requirement. You’ll make payments once a month.
- Loan amount: $10,000 to $1 million
- APR: 8% to 25%
- Loan term: One to three years
- Approval time: Average of three to four days
- Read our Bond Street review.
- Loan amount: $10,000 to $350,000
- APR: 10% to 25%
- Loan term: One, two or three years
- Funding time: Seven days on average
- Read our Credibility Capital review.
If you’re looking for less than $100,000 with a shorter term: StreetShares
For companies with at least one year in business and low revenue, starting at $25,000, StreetShares is a good choice, with APRs from 9% to 40%. However, StreetShares limits your amount of funding to a maximum of 20% of your annual revenue. For example, if you earn $300,000 in revenue, you can borrow up to $60,000. The loans are best-suited for working capital as opposed to a large expansion.
- Loan amount: $2,000 to $100,000
- APR: 9% to 40%
- Loan term: Three to 36 months
- Funding time: One to five days
- Read our StreetShares review.
If your business has a limited operating history and you’re looking to borrow a small amount of money for working capital, consider BlueVine’s line of credit, which allows you to borrow up to $100,000. To qualify, you need a minimum credit score of 600 and annual revenue of $60,000, and at least six months of business history.
- Loan amount: $5,000 to $100,000
- APR: 16% to 62%
- Loan term: Repaid over six months
- Funding time: As fast as 24 hours
- Read our BlueVine review.
Lending Club provides fast access to cash, with funding as fast as two business days. The lender offers both term loans and lines of credit, so it’s suitable for either an expansion or working capital. Besides a minimum 600 personal credit score, you need at least $75,000 in annual revenue and two years in business to qualify. The company offers competitive rates, 8% to 35% APR, and repayment terms of one to five years.
Small-business loans for veterans
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Want to compare more small-business loans?
NerdWallet has created a comparison tool of the best small-business loans to meet your needs and goals. We gauged lender trustworthiness, market scope and user experience, among other factors, and arranged them by categories that include your revenue and how long you’ve been in business.
Steve Nicastro is a staff writer at NerdWallet, a personal finance website. Email: Steven.N@nerdwallet.com. Twitter: @StevenNicastro.
Updated Feb. 24, 2017.