If you're a veteran with a dynamite business idea and the gumption to make it work, there's funding out there that’s just waiting to land in your pockets. Some comes from the government and some from charitable organizations or individuals. All of it is meant to thank you for your service and give your new business an edge.
Now, it's not exactly free money, but it's way better than going it alone. Here's how to get grants and zero-interest funding for your veteran-owned small business. We’ve brought in our friend, and small business pro, Len Briskman to help answer your biggest questions about getting grant money, free loans and more. But first, let’s start at the beginning.
What Qualifies as a Veteran-Owned Small Business?
Simply put, any small business that’s owned by a veteran of the US military. So if you’ve ever served, even if you were never deployed, you probably qualify. Veterans with a service-related disability can get additional certification and extra benefits, too.
"Now, the assumption that there’s tons of free money out there for veterans is a total myth—but there are still plenty of advantages to starting a veteran-owned small business. Veterans often gain unique and valuable skills during service that make them well-suited to be in business."
Spouses and widows of veterans and service members can also qualify for special financing when starting a small business.
Where Can I Get Money for a Veteran-Owned Small Business?
Surprisingly, Briskman said that one of the best places to start is the local bank where you have your checking and savings accounts. Even if they don’t offer you a loan, they can take a look at your business plan and advise you on your best options.
The Small Business Association (SBA) is another excellent resource. They don’t loan directly to small businesses, but they provide resources and coaching (especially to veterans). They house the Office of Veterans Business Development, which runs business boot camps and other training for vets. If you don't have a business plan yet, this is the place to start.
Besides loans, you can always look into grants as well. In business, a "grant" refers to money given for a special purpose (like opening a new location) that you don't have to pay back. A couple of good places to start your search for the right grant include:
- Grants.gov website: This is a very large database that includes grants for both nonprofits and for-profit businesses. Pro tip: Use the filtering options to make searching less overwhelming.
- City and state economic development agencies: Many cities and states are looking to support new businesses. You can check your current area or areas you’d be willing to move to (stagnant areas may offer extra money to boost growth).
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What Is a Free Loan?
Unfortunately, it may not be exactly what you think — there’s no such thing as free money. But a free loan (also known as a free grant) is the next best thing. It’s a business loan that’s interest-free or offers a reduced rate, said Briskman. That means there’s less money to pay back when the loan comes due.
The SBA doesn’t provide loans directly, but they’re the ones who make free loans happen by working with your bank to waive or reduce the interest and up-front fees.
You will need to provide documentation when you register with the SBA in order to qualify for a free loan. For veterans, a copy of the DD 214 form is the proof of service you need (It’s provided to all veterans, except dishonorable discharges). Here’s who qualifies for the SBA’s free loan program:
- Active service members participating in the Transition Assistance Program (TAP)
- Reservists and National Guard members
- Service-disabled veterans
- Veterans who were not dishonorably discharged
- Spouses or widows of active service members, veterans and reservists
You have the best chance of getting a free loan if the amount you need is less than $350,000 dollars: 73% of loans disbursed to veterans by the SBA are under this amount.
Does the VA Offer Small Business Loans?
The VA provides a number of different types of loans to veterans, including home loans, but they don’t provide business loans. You will need to find the funding you’re looking for through other banks and investors, instead. Nonprofit organizations and the SBA can help set you on the right path to a good, reputable lender.
As you already know, a lot of planning goes into opening the doors of a small business. But as we’ve just gone over, if you’re a veteran, you can tap a number of extra resources to help get your entrepreneurial dreams rolling.
And now you know how to get this journey started, from securing the cash you need, to the benefits of loans and grants. Remember, before you, someone like you has done this as well. Find them, pick their brain and let them help you achieve those entrepreneurial dreams of yours. Go get ‘em, soldier.