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By James Pruitt, Senior Staff Writer

Remember the importance of the Small Business Administration, SBA in facilitating economic transactions for Veteran Small Business Owners. The SBA can facilitate loans as well as grants and lines of credit. Starting with the SBA, they can also assist Veteran Small Business Owners to find the best direct lenders.

The Small Business Administration often provides the first point of contact for funding. As for loans, the SBA can provide leads for the direct lenders most willing to provide government-guaranteed small business loans.   They can help with the next steps in forging a relationship with the direct lenders who will be your direct contacts after obtaining these loans. Best of all, the SBA tends to cap the APR to prevent the gauging of small business applicants.

Still, the terms may vary depending on government programs, and the direct lenders themselves have their own terms in their negotiations with the SBA.  Annual Percentage Rates, APRs for these loans may range from 4.5% to 35%. Let the buyer beware, shopping for the best deal through the SBA is not always a simple process.

In other words, it is the lenders themselves who finally determine the terms for any loans they grant you. These terms often depend on a vast range of factors such as your industry, your personal circumstances, and your financial situation. Some special SBA programs may consider veteran status, race, national origin, gender, or any number of other factors.

In the end, the SBA guarantees these loans. However, the small businessperson’s contact remains with the lender. Lenders may include banks, credit unions, and any variety of financial institutions the government has deemed worthy. 

Remember your direct contact will be a private institution. They, rather than the  SBA,  hold final discretion regarding the approval of your loan.

The SBA may serve as a crucial first contact for Veteran Small Business Owners seeking not just loans, but also grants and lines of credit. However, obtaining loans is a multi-level process. The private institution administering the government program will be your ongoing first contact. Becoming acquainted with the private institution itself is a separate process from getting to understand the SBA program that guarantees the money.

Veteran Business Owners need to maintain closer contact with their direct lender. Even with SBA-backed loans, the direct lender provides information about the terms of the loan, especially in the initial negotiation process. Remember that the direct lender may have different loan programs for franchise business owners, those seeking equipment loans, and loans seeking short-term loans, including following natural disasters or emergencies. 

In our next article in this mini-series, we delve into the process of interacting with your direct lender. Short of an actual default, after obtaining a loan, your interactions with the SBA itself will likely be minimal. 

Interactions with these private lenders involve their own set of challenges. Additionally, the full range of private options vastly out scopes that of government-guaranteed loans. The wild frontier of purely private loans may not provide the same safety and may require more information beforehand without the safety net of a federal guarantor.

VAMBOA, the Veterans and Military Business Owners Association hope that part one of this two-part mini-series has not only been valuable but provided some unique perspective.   Stay tuned for the next article.  

We work hard to bring you important, positive, helpful, and timely information and are the “go-to” online venue for Veteran and Military Business Owners.  VAMBOA is a non-profit trade association.   We do not charge members any dues or fees and members can also use our seal on their collateral and website.   If you are not yet a member, you can register here:

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