Reacclimating to society as a veteran can be difficult, especially when it comes to getting a handle on your personal finances. Fortunately, veterans have unique opportunities when applying for financial loans. Want to learn more about the best personal and small business loans for veterans? Read this guide! It breaks down veteran-specific personal and business loans and can help you find exactly what you need.
Readjusting to society as a veteran is difficult, especially when traditional banks are extremely hesitant to give out loans. Even when it comes to official channels like the VA, understanding finances can be confusing. Are you a former or current service member who feels overwhelmed by the prospect of getting a loan? We can help! Our guide can show you how to get the best personal and commercial loans for veterans!
Before we break down the specific types of VA loans available, we need to understand the difference between VA direct loans and VA-backed loans.
A VA direct loan is provided directly by the VA. Direct loans don’t require down payments but have higher fees than what you would get from the bank. VA loans can be used for a wide variety of purposes, although they are only for personal use. They can be used for:
- Buying a New Home
- Refinancing Existing Properties
- Remodeling Existing Properties
A VA-backed loan is provided by an organization outside of the VA. The VA is involved by guaranteeing a portion of this loan, which makes it easier to qualify for borrowers who would otherwise be ineligible. VA loan entitlement is usually 25% of the loan up to a conforming limit. This limit depends on which U.S. county you’re in, but it most often caps out at $548,250.
Unlike VA direct loans, VA-backed loans may require a down payment, although this is uncommon. Additionally, there are more requirements associated with securing VA-backed loans. These requirements differ depending on the lender, but common criteria include:
- Employment History
- Financial Stability
- Your Type of Income
Now that we better understand the difference between a VA-backed loan and VA direct loan, let’s examine the specific types of loans the VA offers:
One of the best options for a veteran is a VA-backed purchase loan. VA-backed purchase loans have no down payment, low closing costs, and generous interest rates. Furthermore, a VA-backed purchase loan’s requirements are easy to meet. If you have a valid COE and meet income and credit requirements (and are a veteran), you can get this kind of loan.
This type of refinance loan lets you borrow money against the equity of your home. This money can then be used to refinance your existing loan or expenses like renovations, college tuition, or any of your other needs.
A cash-out refinance loan is especially helpful for paying off your conventional loans or other VA loans you’ve taken out.
The final type of personal VA loan we’ll be discussing is an IRRRL loan. IRRRL loans let you refinance existing VA-backed loans, which can be used to swap your variable mortgage rate to a fixed rate. Switching your variable rates to fixed rates is one of the best ways to stabilize your long-term expenses.
Unfortunately, the VA does not offer small business loans to veterans. This means that veterans can’t use the VA for any commercial purposes. However, there are still great opportunities for commercial loans for veterans:
The SBA Express Loan Program is a loan offered by the Small Business Administration to all small business owners in the U.S. This program offers regular and veteran business owners term loans and lines of credit up to $350,000. This money can be used for many business purposes, including:
- Starting up a new business
- Operational costs like buying new inventory or equipment
- Purchasing of new business property
- Refinancing existing debt
SBA Express loans are an extremely valuable program that can help veteran-owned small business owners take their business to the next level. SBA Express loan applications can get approved for financing in as little as 36 hours and offer extremely low interest rates and minimal fees.
There are a few simple requirements you must meet to qualify for SBA express loans. You must:
- Meet the SBA definition of a small business
- Operate in the United States or a U.S. territory
- Have reasonable equity ready to invest
- Have invested financial resources into the business
After clearing these requirements, you’ll need to meet the individual lender’s financial requirements. These vary, but you’ll typically need to have been in business for two years, have a FICO score greater than 650, and show strong annual revenue.
Locking down financing for your business can be a challenge, especially if you’ve maxed out your existing line of credit or are waiting to hear back from the bank. Traditional banks decline the vast majority of applications for loans today, even if your business is doing well.
If you’ve struggled with securing small business loans for your veteran-owned business, turn to QualiFi. We can secure a business line of credit for veterans that ensures you have the working capital you need to grow. Contact us today.