According to a 2018 study conducted by Military Times, veterans have a more challenging time obtaining funding to start a business than non-veterans. The study also uncovered the fact that veterans must submit more applications before they eventually gain approval. When this does happen, the approved loan amount is often for less money than non-veterans receive. The study proposed several reasons for why this inequity in loan approval and distribution might exist.
Less Opportunity to Build a Solid Credit History
The military lifestyle is one that comes with frequent reassignments to other states and countries. The constant moves and lack of participation in civilian life can make it difficult for a veteran entrepreneur to demonstrate a stable credit history when the time comes to apply for a business loan. Additionally, veterans typically request smaller business loans of less than $100,000. Larger banks don’t approve these smaller amounts as often as they do larger loans.
Tips to Help Veteran Entrepreneurs Obtain the Business Financing They Need
It can come as a shock to military veterans to run into opposition when they’re trying to do something positive like starting a new business. Other veterans who have launched second careers as business owners recommend starting small and building up a positive credit rating before approaching a bank for a loan. They might also consider using veteran-friendly resources such as the Veteran Entrepreneur Investment Program. The founders of this program better understand the challenges of former military members and are more willing to work with them to obtain business financing.
Working with a finance company such as Flex Capital can also make an attractive option. Whether you have received loan denials from banks or simply prefer to start the loan application process with an alternative lender, we invite you to contact us to learn more about how we can help make your dreams of business ownership come true.