Military veterans often face challenges when it comes to funding their business with a veteran small business loan, but finding capital that works for you is not impossible, especially when you have help. (Full Disclosure: I am the CEO and co-founder of StreetShares, a financing community for veteran business owners.)
If you find yourself in this situation, here are seven tips to help get you started on getting your business finances in order.
1. Assess Your Strengths & Weaknesses as a Borrower
Before you begin your search, make sure you know where your small business stands. How much funding do you need? How much can you afford to pay back each month? Are your margins higher than the interest rates?
It is also helpful to be realistic about your chances of accessing different funding options. Do you know your credit score? (If not, you can check it free on Credit.com.) How are the rest of your financials?
Finally, make sure your documents are in order. Have you filed your taxes? Do you have an updated balance sheet and income statement? Being prepared can save you time and grief later on. Follow these two easy steps to determine your financial needs.
2. Understand the Terrain Lenders Navigate
There’s a heap of regulations and internal policies that lenders must comply with in regards to small business funding that can make the lending experience hard and expensive for the borrower and the lender. It’s important to understand some of these factors that could affect your chances of getting funding.
For example, the lender must have access to capital on their end to be able to fund your loan. They also need the proper finances and marketing it takes to convince you to do business with them.
From the borrower’s perspective, here are a few things that should help you qualify for funding.
- Earn the lender’s trust by displaying evidence of a good track record; you may have to find a way to convince lenders that you are trustworthy if your small business hasn’t yet established a good credit history (e.g., consistent, timely payback in the past).
- Come to the table with assets to offer as collateral for the loan.
- Have a compelling back-story in which you describe experiences and skills gained during your service that set you up for success.
Proper knowledge of both perspectives will help you have a better chance of smoothly navigating the early stages of funding.
3. Conduct Reconnaissance on the Options Available
While there may be a lending gap for veterans today compared with the veteran business loan options for veterans following World War II, technology is helping fill that gap with alternative online options. Make sure you research what’s available — from traditional banks to online lenders — and go with what makes sense for you given the stage of your business, your revenue and margins. Finally, make sure you understand what is offered: Some lenders charge 50% or more for loans, which few new businesses can afford.
4. Think Outside the Box
Funding can sometimes come from an unconventional source. Do you have a family member, friend, fellow veteran or schoolmate that made it big and would love to be part of your adventure? If you’re a young business, try a crowdfunding campaign or look for veteran small business grants, SBA loans or contests and awards for veteran entrepreneurs.
5. Connect with Veteran-Focused Mentoring Programs
Mentors provide insight and connections that can help accelerate the growth of your business, as well as teach you invaluable skills – such as how to present your business to potential investors. There are lots of great veteran-focused entrepreneurship mentoring programs out there, such as:
- Bunker Labs is a program built by veterans to help veteran-owned tech startups launch and accelerate their businesses.
- American Corporate Partners (ACP) is focused on helping military members as they transition into business. ACP will match veteran entrepreneurs with a mentor who shares the same personal and business interests for a 12-month mentoring program.
- Entrepreneurship Bootcamp for Veterans with Disabilities is designed to help veterans launch and grow their businesses by leveraging skills veterans learned in the military and applying them to business ownership.
- Some states have programs for veteran entrepreneurs. For example, Veterans Florida has developed an entrepreneurship program that offers a tuition-free, online and on-campus program. It’s designed to work around busy schedules, giving participants the option to access local resources such as business mentors at partner campuses.
6. Follow Through
You would never show up on a mission in the military without training for it and having a well-thought-through plan. You should take funding applications just as seriously — be responsive to questions from the lender you’re working with and prompt in delivering asked-for information.
Lenders work with a long list of businesses seeking funding. Small business owners should aim to make lenders happy to call them first thing in the morning.
7. Believe in Your Mission
Veterans bring skills, knowledge and grit to the table. Smart lenders know this makes you a high-value asset as a business owner, partner or borrower. As you grow your business, leverage your experiences in uniform and prove that you and your company are a worthwhile investment. You’ve got this.
Image: Steve Debenport