Our goal at Lending Valley is to provide all small business owners access to the best loans possible for their business. You can rest assured we will get you the best rates in the market!
Established in 2007 to provide US veterans with an opportunity to start or build a business and make their entrepreneurial dream a reality, the Patriot Express Program was incredibly popular – even though the program itself “officially” concluded in 2013.
Veterans continue to talk in glowingly positive ways when speaking of the Patriot Express Loan, and while it is no longer a viable option for veterans exiting the service today there are a number of other lending options available through the US Small Business Administration to fill in the gaps and guarantee that veterans get the funding they need to be their own boss and grow their own business.
Below we highlight what made the Patriot Express Loan such a popular opportunity as well as touch on a number of key lending options still available to veterans that can qualify through the SBA 7(a) Express Loan programs.
Let’s dig right in!
A Quick Primer Regarding the Patriot Express Loan Program
In 2007, the US Small Business Administration made the decision to make a pilot program available to US veterans, calling it the Patriot Express Loan – a part of the SBA 7(a) financing services available through this governmental body.
Differing from traditional SBA loans available to any US citizen and business owner that qualifies, this loan package was specifically intended to be used by veterans as well as other military members that qualified so that they could get the funding needed to establish a new business or grow an existing opportunity.
The idea here was to make sure that our veterans at every opportunity to hit the ground running when they exited the service with financing in place to start a new business or to grow a business that they had already been working on. The SBA understood the sacrifice and the commitment these military members had already made in service to our great nation and wanted to be sure that there was a way they could recognize that officially.
All veterans and eligible military members that were able to meet the qualification requirements were able to access lending packages good for up to $500,000 as part of the Patriot Express Loan package.
The funding accessed through this type of lending package could be used for pretty much any business-related purpose imaginable, which made it very attractive on its own, but it was the speed in which approval times were handled that made the Patriot Express Loan opportunity really enticing.
The traditional SBA turnaround time is almost glacially slow (and for good reason in most cases). But the Patriot Express Loan package had a much faster turnaround time designed to get funding in the hands of our veterans as quickly as possible – and at very favorable rates.
In fact, it was possible to enjoy ridiculously low interest rates of between 2.25% and 4.75% above the prime rate (depending of course on the amount of the loan as well as the overall repayment terms). These kinds of interest rates were certainly not the norm from the SBA at that time.
The popularity of this lending opportunity happened almost overnight, and between 2007 and 2012 more than $703 million in lending packages were guaranteed through the Patriot Express Loan program from the US SBA.
Unfortunately, when the SBA started to dig deeper into the data and analytics behind the success or failure rate of these loans they uncovered the fact that default rates on Patriot Express Loan financing was significantly higher compared to other SBA packages.
The US Government Accountability Office corroborated these findings, discovering that one out of every five veteran business owners that borrowed $25,000 or less were unable to repay that loan later down the line.
The SBA was forced to shutter the program permanently because of costs overriding the income that was able to be brought in. These financing packages ceased to become available to veterans in 2013.
Current SBA Patriot Express Loan Alternatives
Though it is no longer possible to take advantage of the SBA Patriot Express Loan scheme (a disappointment to be sure) there are still quite a few different SBA options available for veterans to take advantage of.
The SBA recognizes that there are more than 2.5 million businesses in the United States today owned in part or in whole by military members and they still want to make sure that our veterans gain access to the funding that they deserve.
Here are just a couple of the most popular financing options available on the market today.
The Military Reservist Economic Injury Disaster Loan Program
This lending program is designed to fill in some of the gaps left behind by the Patriot Express Loan package disappearing.
Providing funding to small businesses that have suffered some sort of economic loss because of core employees called up to active duty after being part of the military reserve, these programs are engineered to help businesses meet overall operating expenses until they are able to return back to normal when the reservist returns home from active duty call ups.
These kinds of loans can be taken for up to $2 million, though individuals will have to provide some sort of overall collateral on any lending package that’s going to exceed $50,000. The good news here is that the interest rate is locked in at 4% and small business owners will be happy to know that they have up to 30 years to repay the entirety of the loan (with zero repayment penalties for early payment, too).
At the same time, small business owners looking to leverage this lending opportunity will want to understand that these loans are not designed for handling anything outside of working capital demands. You won’t be able to leverage this loan to start a business, won’t be able to expand your base of operations with this lending package, and cannot refinance other debt with this loan the way you might be able to with other opportunities.
On top of that, before you’re able to leverage this loan your business will be analyzed to determine whether or not it can fund its own recovery even after the reservist has left for active duty. If this is found to be true the financing package will be denied.
SBA 7(a) Lending Packages
There are a variety of different Small Business Administration loan packages available under what this organization classifies as their SBA 7(a) scheme, giving you ample opportunity to find the right lending solution for your specific needs as well as one that you fit the key criteria for.
While many of these lending packages are designed for small business owners that want access to working capital there are financial packages here that have much more flexible funding sources for those that want to make upgrades, want to acquire other businesses, or want to expand and grow outside of the traditional working capital restrictions.
The standard lending package under this financing scheme gives you access to up to $5 million in financing, provides low interest rates that cannot exceed the overall maximum established by the SBA, and will not require any collateral for loans good for up to $25,000.
The SBA 7(a) Small Loan financing package provides many of the same benefits as the standard offering, with the sole exception being that you will be able to borrow up to $350,000 compared to the $5 million you could receive with the larger package.
The SBA Express Loan also provides funding good for up to $350,000 but it also provides an average approval turnaround time of about 36 hours or less. This is a fantastic alternative to the Patriot Express Loan that is no longer available exclusively to veterans.
Export Express Loans from the SBA are good for up to $500,000. They do require collateral depending on different lending standards and enjoy an approval turnaround time of about 24 hours or less. These kinds of loans, however, are designed exclusively for businesses in the export world.
Export Working Capital Loans provide up to $5 million in financing, share most of the same requirements of the Export Express lending packages from the SBA, and are again designed exclusively for export industry businesses.
Finally, you have the International Trade financing opportunities from the SBA. You’ll be able to again borrow upwards of $5 million, will have interest rates that vary but will never exceed the maximum established by the SBA, and you can expect a turnaround time of between five and 10 days here. These loans are exclusively for exporting businesses, too.
SBA 504 Financing Packages
Though the SBA 7(a) financing scheme is definitely more popular and more widely taken advantage of there are other SBA financing programs that veterans (and non-veterans) can choose to take advantage of.
The SBA 504 financing packages provide you access to funding for:
These kinds of financing packages provide you with up to $5 million in lending with an opportunity to repay these loans over a 10 to 20 year timeline. Interest rates are fixed when you take advantage of these kinds of loans, with overall rates based entirely on the current market rate for five and 10 year treasury issues.
The only sticky thing here is that you’ll have to put down at least 10% of the total loan you’re looking to secure through the SBA 504 package (and maybe even more if you’re a new business or a specialty business).
SBA Micro Loans
The SBA also provides access to SBA micro loan packages, providing financing good for up to $50,000 to businesses that want to either start or expand the business of their dreams.
While up to $50,000 is available to anyone that applies for these kinds of loans the average most people shoot for is about $13,000, plenty of money to bootstrap a new business and build or grow it later down the line with access to even more financing.
The beauty in these SBA micro loan packages is that they can be used in a variety of different ways without a lot of restriction. You can use these loans for pretty much anything business related except for purchasing real estate or paying off debt that your business has already incurred.
Qualifying for SBA Veteran Loans
There are a handful of things you’re going to want to focus on when you go to apply for SBA veteran loans that increase your odds of approval.
For starters, you’re going to want to make sure that you apply for these kinds of lending packages with a minimum credit score of 650. Larger SBA loans (the ones closer to the $5 million upside available) are going to require credit scores of 675 or even a little bit higher most of the time.
On the flip side of things, you may be able to get SBA microloans with less than picture-perfect credit – using them to build your credit – and then go after larger loans when your credit has been improved.
Secondly, depending on the loan you are going after you may not be able to apply for a lending package through the SBA until you have two or three years in business already. You’re going to need to consider these requirements before you apply for specific loans as not meeting this business life threshold may disqualify you instantly.
Verify other eligibility requirements on different SBA loans, too.
Almost all of the SBA packages (particularly those in the SBA 7(a) category) are going to have different types of requirements that you’ll have to meet for your approval to go through. All of these requirements are going to be stated upfront and with a lot of clarity so that you know what you are getting into before you begin the application process.
Lastly, you’ll want to make sure that you have a strong business plan in place and that you have access to collateral if it’s going to be required. As long as you take care of all of these details before you go through the application process you shouldn’t have anything to worry about.
