November 5, 2018
By Bob Coleman
Editor, Main Street Monday
MAIN STREET MONDAY — SBA Veterans Advantage Lending
With next Monday’s Veteran’s Day I thought it would be appropriate to review SBA’s lending programs for veterans.
SBA (7a) loans require an up-front guaranty fee. But for veterans, the fee for SBA Veterans Advantage loans less than $350,000 is 0%. The goal is to encourage greater participation in SBA lending programs by veteran-owned small businesses.
As a snapshot of all SBA veteran loans, up to 73% require $350,000 or less, which is currently supported by the SBA Express Loan Program. Over the last 10 years, nearly 60% of all SBA 7(a) loans have been supported through this loan program. This program has been one of the most popular for veterans securing capital to start small businesses.
The benefit for veterans taking advantage of this program is that since they will no longer have to pay an upfront fee to secure financing for an SBA 7(a) loan, making it easier for the borrower to come up with start-up costs for their small business. Additionally, there is a low, on-going lender fee of 0.55% for these SBA Veterans Advantage loans.
Since kicking off the veteran loan incentive program back in 2016, the number of SBA veteran-specific loans rose more 4% from the previous year. Subsequently, both the 7(a) and 504 lending programs to veterans exceeded $1.36 billion for the last two consecutive years.
The SBA also provides business counseling and training for veterans to the tune of $1.86 billion in loans for 3,094 veteran-owned small businesses. Since 2009, SBA lending has nearly doubled to support veteran-owned small businesses.
To qualify for the new veteran-friendly incentive, at least 51% primary ownership by qualified candidates must fall into one of the following groups:
- Service-Disabled Vets
- Active Duty Military service member participating in TAP (Transition Assistance Program);
- National Guard or Reserve members;
- Current spouse of any Veteran, Active Duty service member or Reservist/National Guard member
- Widowed spouse of a service member who died while in service of a service-connected disability