business loans san diego

Great Types of Financing Options For Veteran Owned Businesses

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In 2018, there were over 2.5 million veteran-owned businesses in the U.S. Veterans are natural leaders to venture forth into territories unknown, with the hope of a positive outcome. Between 10 and 14 percent of all small businesses are run by a veteran.

If you are a veteran in southern California, explore some of these following pathways for business loans in San Diego. Learn here how these funding sources can help America’s bravest shift back into our national workforce.

Do some research today and you will find an option that is right for you.

Small Business Financing Opportunities for Veterans

Before you enter your Google search for “business loans San Diego,” just know that your veteran’s status entitles you to other small business financing methods versus today’s conventional bank loan. Some of these options cover the following:

Small Business Grants

A grant is seed money awarded by a philanthropist, the government, or another company. These benefactors will award grants to a company that can demonstrate how their business will create jobs or increase the local economy.

Small business grants for veterans are commonly awarded to problem-solving enterprises. Grantors will set pre-defined priorities and ask potential grantees to demonstrate how their business will serve the common good. Grants, therefore, are typically awarded to nonprofits or research and development firms.

1. Veteran Affairs Small Business Grants

One place you can find veteran business grants is the US Veterans Administration agency. Department of Veterans Affairs Small Business Grants (VASB) are aimed at helping veterans get their operations up and running.

Like any other grant, VASB grants do not have to be repaid. Borrowers must demonstrate strict compliance as a condition of approval. Review the guidelines before applying to be sure your business complies.

Government Business Loans 

“Government loans” are not what they sound like. The government will not directly loan money to a company. Instead, they generate guidelines for traditional lenders to award funding directly to a business. The government then promises that the loan is repaid to reduce the risk to the lender.

The most popular government-backed loans are the US Small Business Administration (SBA) loans. You can check to see if your business qualifies for an SBA loan by heading to the list of small business categories found in the US Census Bureau industry code.

Examples of business loans in San Diego that are available for veteran-owned businesses include:

2. 7(a) Loan Program

The SBA 7(a) loan program helps businesses generate working capital to pay for certain start-up expenses. These start-up expenses could include buying furniture or uniforms.

The 7(a) loan’s maximum amount is $5 million. The SBA guarantees 75 percent of those 7(a) loans over $150,000. They will also guarantee 85 percent for loans that are less than $150,000.

3. Microloans

These loans enable veteran-owned companies to borrow small or “micro-level” amounts to pay for routine overhead costs. The maximum loan amount a borrower can request is $350,000. However, most microloan amounts are usually around $13,000 per borrower.

4. 504/CDC Loan Program

504 or Certified Development Company (CDC) loans are long-term financial tools that can support a veteran-owned company that can show it contributes to local economic development goals. 504/CDC loans are long term loans that offer fixed rates for major expenditures, like buildings or machinery.

Most 504/CDC loans are usually never higher than $5 million. The SBA will back 40 percent of the 504/CDC loan award while a commercial lender funds the balance.

5. Military Reservist Economic Injury Disaster Loan program (MREIDL)

The MREIDL loan program provides funding to veteran-owned small businesses when the owner or other central company figure is a reservist called to active duty. These loans provide enough capital to pay for normal operating expenses until the reservist is released from active duty.

6. Small Business Technology Transfer (STTR) program

STTR offers funding opportunities to small veteran-owned businesses that collaborate with a research institution on research and development (R &D) projects. Some of these institutions include:

  • Department of Defense
    • National Science Foundation
    • Department of Energy

These partnerships help commercialize technological innovations based on federal R&D findings.

7. Business Lines of Credit

Business lines of credit allow small businesses to take out certain amounts from their existing bank accounts on the condition they agree to pay the balance before their bank’s next billing cycle. When a company cannot repay the withdrawn amount, they pay added interest and service fees.

8. Working Capital Loans

Working capital loans can help a veteran-owned business with the everyday business expenses that their regular cash flow cannot cover. Examples of these everyday expenses might include, rent, utilities or payroll. Think of a working capital loan as “cash flow” on hand to meet immediate needs while you wait for more revenues to come through your door.

These loans are popular because they are quick and easy for veterans to apply for. They do not involve the traditional, complicated bank application process, where a high-level personal credit history level or collateral is needed.

A traditional bank might take weeks to process a loan request. A working capital loan lender can approve you in mere hours.

9. Crowdsourcing

Crowdsourcing (also called “crowdfunding”) lets a small business advertise one of their company’s projects that need financing and request assistance from investors, family members or friends. Crowdsourcing categories includes equity, donation, or rewards-based donation financing.

Equity-based financing lets an investor become the co-owner of your business. Donation-based funding does not offer any reward or other fiscal returns to an investor. Rewards-based initiatives offer an investor your services or products as a way to “reward” them for their help.

Next Steps

Ready to try one of these business loans in San Diego available to you right now? Head over to the Grants.gov website, sponsored by the U.S. Health and Human Services Agency. Check to see if your business fits one of the categories eligible for a small business grant.

Veterans bring an elite skill level to the table when it comes to running a business. We work with America’s bravest every day to help them run their companies and drive the U.S. economy.

Head over to our website and fill out our easy online application to see how much you are eligible to receive. You will get a quote in less than three minutes! At Formula Funding, we help veterans get fast loan relief so their companies can thrive.

Combining a high level of personalized service with a cutting-edge lending platform, Formula Funding delivers an unparalleled banking alternative. We offer a fast and efficient option to get your business the critical funding it needs without the red tape. We work with all credit grades, tax liens, judgments, and charge-offs – something unheard of at a traditional bank. Since 2010 over 15,000 small business owners have used our funding sources to grow and expand.