A business which is small is the pillar of the United States economy. According to this Forbes article, in the past 30 years, small businesses under five years old have added 40 million jobs to the American economy. Many of our veterans dream of joining the ranks of small business owners and some need access to capital to make this dream a reality. AVA business loan can help make this dream a reality. Read on to find out who is eligible for these loans.
Who is Eligible for a VA Business Loan?
VA business loans are available to active military members, veterans, and service-disabled veterans. For a business to qualify, it must be at least 51% owned by someone who fits this description. Non-profit companies are not eligible for a VA business loan, but most for-profit companies are available. However, activities involved in pyramid schemes, gambling, or lending are ineligible.
How Much Am I Eligible to Borrow?
As mentioned previously, the VA does not lend money but rather insures loans from lending institutions. That said, the amount that you’ll be able to borrow will vary based on the lender that you choose. The Patriot Express Loan program sets its guarantees based on how much money is borrowed. If your VA business loan is less than $150,000, 85% of the loan is guaranteed. If the loan is between $175,000 and $500,000, 85% is guaranteed until the loan reaches $175,000. At that point, 75% of the remainder is guaranteed.
For the Military Reservist Economic Injury Disaster Loan Program (MREIDL), the maximum loan amount is $2 million. The amount that you will be able to borrow is heavily dependent on the essential employee who was lost, and the Small Business Association (SBA) will investigate to find out if your business has the resources to recover without the loan.
What’s the Interest Rate on a VA Business Loan?
For a Military Reservist Economic Injury Disaster Loan (MREIDL), the loan amount is set at 4% for a maximum of 30 years. For a Patriot Express Loan, the interest rate is typically 2-5% above the prime rate.