By James Pruitt, Senior Staff Writer

Grants and loans for your small business are quite distinct entities.  It is important to understand the differences.  Loans may provide favorable terms and reduced interest rates, as well as better forbearance and deferment policies. Grants should be favored. Grants are yours to keep. A brand-new entrepreneur with a startup is well advised to research grant opportunities first and foremost, before taking out loans as needed.

This article will provide some of the important distinctions.

Small Business Grants

Whence come small business grants for veterans.   Grants generally come from two sources:  They come most of the time from governments and private organizations. Remember, though, that grants generally come with conditions.

Organizations that provide grants rarely bail out startup businesses or businesses deep in debt. Grant money is selectively distributed, and the benefactors choose their funding paths carefully. Nonprofits, minority-owned companies, and medical firms with experimental treatments are examples.

Many grants go to rural small businesses, in order to help maintain economic vibrance in the surrounding area. Organizations that provide the grants usually hope the money will go to the public good.

Veteran-Owned Businesses are yet another example. Many resources online provide information for small-business grants designed for Veteran Business Owners.

The following website is an excellent resource for private organizations that provide small business grants for Veterans: 12 Small Business Grants for Veterans in 2021 (fundera.com). Another good resource is Grants for Veterans Starting a Business – Kabbage Resource Center | Kabbage Resource Center.

The federal government also provides grants to help many types of struggling business owners. Grants.gov is a great resource for government-sourced small business loans for veterans.

Small Business Loans

What about small business loans? Terms vary depending upon conditions of the debtor, creditor, loan administrator, and society in general. Thorough research is key, as loans carry greater risks than grants.

The Small Business Administration is an excellent resource for those who choose this lending route. The relevant website is SBA Business Loan Information for Veterans | The U.S. Small Business Administration | SBA.gov

First steps for considering a good veteran’s SBA loan include the following questions: (1) how much money fits your current business needs, (2) the purpose of the loan, (3) the loan terms, and (4) your own plans and financial circumstances.

Fraud

Dire consequences await those who dishonestly accept small business grants. These grants come from governmental or private institutions with a purpose. Never lie to accept a grant. The same goes for loans. Private institutions can pursue you in civil (and criminal) court.

As for the government, it is never a good idea to lie to a government institution. You will have to pay back the money, and they will find a way to make you do it, even if they had already deposited the money into your bank account by mistake.

Takeaways

Funding resources for veteran owners of small businesses are readily available. Finding various private or public sources of funding may take some detective-work but do your research because there are many options.  You should find the one(s) that are right for your business and your needs.  We hope the resources provided may provide a step-in-the-right-direction and a starting point. honest   Whatever your path, consider your financial resources, personal circumstances, and long-term capacities.  VAMBOA wishes you great success.

VAMBOA hopes that you have enjoyed this article.   We work hard to bring our audience timely and important information.

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By Debbie Gregory.

At some point most businesses need to borrow money. Choosing the wrong type of loan can do irreparable damage to your business’s bottom line. There are countless financing options out there and the key is to choose the right one that fits your business needs and your ability to pay back the loan.

Choosing the wrong option can translate into less short-term on-hand cash for your business to spend.  It can also mean smaller overall profits as you pay down the loan, and a longer and more stressful search for your loan in the first place.

In order to select the correct option for your needs, you should make sure you avoid these mistakes:

1.) Not knowing your credit score:

Your personal credit is always a factor when applying for a business loan. It shows your creditworthiness and your ability to pay the loan off to the lender. A score of 700 or higher is considered good for a personal score.

These are credit reporting services where you can check your personal credit score:

• Equifax (https://www.equifax.com/personal/)
• Experian (https://www.experian.com/)
• TransUnion (https://www.transunion.com/)

These are credit reporting services where you can check your business credit score:

• Dun & Bradstreet (https://www.dnb.com/)
• Equifax (https://www.equifax.com/business/)
• Experian (https://www.experian.com/small-business/services.jsp)

2.) Not doing your research:

It always pays to be prepared for the worst. Do not until you and your business is in dire need of cash to start the process of researching lenders and applying for loans. Do your research well in advance and keep a list of credible lenders on hand just in case you find that you need one.

3.) Not knowing your options:

Rates, fees, and terms for financing can vary greatly depending on where you go to obtain a loan and even the time of year you do it in. Make sure to do your due diligence and thoroughly research the options you are presented with.

4.) Not applying for enough money:

You never want to take out a loan only to find that you need another loan a few months later. Running a business comes with some uncertainty and unforeseen expenses that can pop up.   These may include new competition, equipment breakag, or employees quitting. Make sure that you are borrowing enough money to cover your immediate needs as well as anything unexpected that may come up.

5.) Not knowing your payment options:

Getting cash fast when your business is in a slump is very important, but you need to make sure that you will be able to pay the loan off once you are back on your feet. The payment schedule needs to fit with you and your business. If you cannot keep up with the payments, it can damage your credit and potentially lead to your business’s failure.

Getting the loan that you need shouldn’t be a stressful or scary experience. With proper planning and in-depth research you can be prepared for any possible disasters or downturn in your business. Taking out a loan is never something a business owner does lightly but done correctly it can add up to one result, a thriving business.

By Debbie Gregory.

In this series of articles, we examine the financial options and program available to business owners to fund their business.

In the three previous articles, we have looked at self-funding, venture capital and crowdfunding. In this final installment, we will look at Small Business Loans.

Once you have your business plan together, including your expense sheet and financial projections, contact various banks and credit unions and compare terms they are offering for small business loans.

Loans guaranteed by the U.S. Small Business Administration (SBA) are very popular since they are guaranteed if you meet the qualifications, including meeting the government’s definition of a small business for your industry and already having been turned down for a loan on your own from a bank or other financial institution.

The SBA’s mission is to further the growth and development of small businesses throughout the country. However, the SBA doesn’t lend money directly to small business owners. Instead, it sets guidelines for loans made by its partnering lenders, community development organizations, and micro-lending institutions.

SBA-guaranteed loans generally have rates and fees that are comparable to non-guaranteed loans, lower interest rates, longer repayment terms, as well as manageable fees. And many of the SBA programs come with continued support to help you start and run your business.

There are three different kinds of SBA loan programs, each with their own terms, conditions, and advantages:

• SBA 7(a) loan, which is the most popular loan type, can be for loans as high as $5.5 million in cash with terms up to ten years.
• CDC/504 loans, which are meant specifically for purchases like real estate and machinery with terms up to 25 years.
• SBA microloans for a max of $50,000, which can be repaid for up to six years.

You typically need to have a 680 or higher personal credit score and ability to repay, 1.25 times or better debt-service coverage ratio (DSCR), the measurement of the cash flow available to pay current debt obligations, to get an SBA loan.

Veteran and Military Business Owners Association, VAMBOA,