Small Business Loans: 3 Tips for Veterans

By: Nicole Fallon

Original Article: BusinessNewsDaily

When military veterans return home from their service, one of the first decisions they have to make is what career path they want to pursue as a civilian. Entrepreneurship is an enticing option for many vets, as it allows them the freedom to be their own boss while using transferrable military leadership skills.

“Veteran entrepreneurs are on the frontlines, not unlike they are in the military,” said Jim Salmon, vice president of business services at Navy Federal Credit Union. “They’re in charge of their own destiny, taking control of their direction and taking chances when they have to. They can leverage a lot of their military experiences and strengths to succeed [in business].”

If you’re a current armed-forces member or veteran and are thinking about starting your own business, you may have considered applying for a small business loan to help finance your venture. Loan experts and military entrepreneurs shared their advice for surviving the loan-application process as a veteran. [Top Jobs for U.S. Veterans]

Research all available options

The first things any entrepreneur needs when applying for a loan are a solid business plan and some cash or other assets to put down as collateral. Once your plan is written and your finances are in order, the next step is to find a lender. This part can be difficult, since there are numerous lenders and loan packages that a small business owner can apply for.

Michelle Stone, a spokesperson for financial solutions search tool AmOne, said that expert guidance from a trusted financial professional can help you simplify your search, especially if you’re seeking out military-specific lending programs. Some things to consider are what type of credit scoring model the lender uses, as well as whether you can apply for a loan with set rates and fixed terms.

“Veterans should make full use of their Transition Assistance Office (TAO),” Stone added. “The TAO has resources available to aid with financial planning, which will be critical when transitioning from service to owning a small business. There are also resources available through organizations such as the Financial Industry Regulatory Authority (FINRA) and Military Saves for managing debt and credit and for improving credit scores.”

Get help from the SBA

When Katriel Calderon left the Army in 2010 and tried to start a business, he learned the hard way that the loan process wasn’t as clear-cut as it seemed. Filling out the initial application was easy enough, but he found that, despite having a good credit score and cash flow, commercial banks wouldn’t provide the necessary funds for his venture. He finally visited his local Small Business Administration office, where he found the help he needed.

“The SBA’s job is to guide you,” said Calderon, co-founder of The Mavens Table and vice president of Sebastian Cruz Couture. “There are no strings attached, and [SBA representatives] will guide you to alternate means of financing your goals. This proved to be the difference between starting up and not for myself and for two other veterans.”

Sam Coyl, a former Marine and current president and CEO of business IT solutions provider Netrepid, had a similar experience, and discovered that “SBA-approved” lenders aren’t always the ones an actual SBA representative would recommend.

“Just because a bank had the designation doesn’t mean it is good at processing these types of loans,” Coyl told Business News Daily. “As I went through the process of finding a bank, we started asking more and more detailed questions about their experience, number of successful SBA loans, number of internal people processing those loans, etc. Our local SBA rep helped in that selection process by supplying some of the qualification information that helped us rule out several banks before we even got started.”

Be patient

For any hopeful entrepreneur, the loan-application process takes some time. Former Air Force Capt. Bill Whitehurst, who founded business brokerage firm Whitehurst Mergers and Acquisitions, noted that applying for a small business loan can often take two months or longer from start to finish. As a brand-new startup, you may also need to apply several times before receiving approval.

“Banks generally do not like startup businesses,” Whitehurst said. “A three-year proven track record with positive owner’s cash flow will be a definite plus in acquiring a business loan.”

Salmon recommended taking a job in the industry in which you want to start a business, to both familiarize yourself with it and help you save up some money before venturing out on your own.

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