SBA 504 Loans for Veterans and How They Can Help

sba veteran loans

The Small Business Administration (SBA) is dedicated to honoring the veterans that have served in our country’s military and their families, and does everything it can to support them as they pursue business enterprises.

On a large scale, veterans have proven to be great small business owners and help advance the SBA’s job creation goals as well as contribute to the prosperity of small businesses. During their service, veterans develop skills and leadership through their training and experiences that are invaluable when starting or owning a small business.

The SBA offers veterans special training programs and special financial incentives, and also favors veterans. This goal is written into the Code of Federal Regulations: “SBA will process the application of a business owned or controlled by a veteran or dependent promptly, resolve close questions in the applicant’s favor, and pay particular attention to maximum loan maturity.”

To take advantage of these benefits, you can be any one of the following:

  • A veteran
  • A service-disabled veteran
  • Active-duty military participating in the Transition Assistance Program (TAP)
  • A reservist or National Guard member
  • The current spouse of any veteran, active duty service member, reservist or National Guard member, or the widowed spouse of a service member who died while in service or of a service-connected disability

If you fall into one of the above categories and own or control more than 50% of a small business, you are eligible for special consideration.

SBA Training Opportunities for Veterans

The SBA has an array of programs that provide training and informational support to anyone who needs it, including veteran business owners.

The SCORE program offers business mentoring to entrepreneurs at hundreds of locations, and offers in-person or long-distance options. The SCORE organization will find you a mentor who will stay with you and share their knowledge and experience for the life of your business.

Another source of invaluable information and assistance is your local Small Business Development Center. There are over 900 centers nationwide that offer a variety of services tailored to the needs of the local economy.

The SBA’s Office of Veterans Business Development offers several programs specifically for veterans, including:

Finally, Veterans Business Outreach Centers are located throughout the United States and offer training in office and through webinars, mentoring and a host of other valuable services.

SBA Financial Programs for Veterans

The SBA has a special program for service-disabled veterans and provides special conditions for 7(a) and 504 loans.

The Service-Disabled Veteran-Owned Small Business Concern Program allows federal agencies to set aside acquisitions for service-disabled veteran-owned small business concerns to compete for exclusively and in some cases to make them sole-source providers.

The SBA Express Loan Program, which expedites 7(a) loans of $350,000 or less, has an upfront guaranty fee of 3% of the loan. Under the SBA Veterans Advantage, that fee is waived on loans between $150,000-$350,000.

The CDC trade association, NADCO (National Association of Development Companies), following the SBA’s example, created the VetLoan Advantage, aimed at reducing loan fees. Participation is voluntary for CDCs. TMC gives veterans who own 51% or more of their businesses a cash rebate of $3,000 at the time their loans are funded.

Last but not least is the SBA 504 loan. This loan helps small business owners acquire fixed assets—land, buildings, equipment and can finance construction, renovations and equipment upgrades. A 504 loan can be of any size, since it is a partnership between the CDC and a conventional lender, which receives the first mortgage, and there are no limits on the size of that loan. The SBA will loan up to 40% of the project total, up to $5 or $5.5 million depending on the project, on the second mortgage, at a fixed, below-market rate for 10 or 20 years. The borrower contributes 10% of the loan (15% for single-purpose properties) as collateral.

  • 50% Conventional Lender
  • 40% CDC
  • 10% Borrower

For veterans looking for a loan larger than the size of the SBA Express, the 504 is an excellent option. If this option seems right for you, remember to contact your local CDC; their experts can provide valuable assistance and guidance. TMC even has a sister organization, Working Solutions, that provides mentoring and microloans.

TMC Financing is one of the nation’s top-ranking CDCs and a Premier Certified Lender with the SBA. TMC’s 504 loan experts can guide you through the loan process and explain all of your options. Contact a 504 expert at TMC for more information today.

 

Barbara Morrison

Barbara Morrison

Barbara Morrison, a local small business advocate and civic leader, founded her first company TMC Financing in 1981. TMC is a Certified Development Company that provides commercial real estate financing to small business owners via the SBA 504 Loan Program. TMC consistently ranks among the top certified development companies nationwide, and has funded projects worth more than $9 billion across California and Nevada. Nearly 5,000 small businesses have benefitted from this financing, resulting in the creation of an estimated 50,000 jobs. TMC is also the No.1 SBA 504 hotel lender in the United States. Barbara is also the founder of Working Solutions, a Bay Area microlender whose mission is to provide micro entrepreneurs, particularly low-income individuals, women and minorities, with the access to capital and resources they need to start a successful business.
Barbara Morrison