5 Common Challenges for Funding Veteran-Owned Businesses
Whether you’re a veteran who’s just starting on an entrepreneurial journey or one who’s at a turning point, maintaining healthy cash flow is always a priority. To that end, having a dependable source of outside funding is crucial. Often, veterans have a harder time receiving financing than non-veterans — and get less money if approved. What’s going on? Here are a few reasons for this phenomenon, and how to overcome it.
1. Credit Issues
Military life, which usually involves frequent moves, can lead to potential veteran business owners having lower credit scores than non-veterans in their age bracket. This is particularly true if they were frequently deployed on short notice. Be proactive in this area; address personal debt and get some financial counseling specific to veterans if you have issues in this area. The Department of Veteran Affairs is a good place to get initial help.
2. Lack of Knowledge About Resources
Speaking of resources, it’s imperative to know about educational resources that are available to you as a veteran to help you secure business funding. You might not have had the time or opportunity to research your options before. The Institute for Veterans & Military Families (IVMF) is one excellent organization to check out to get information and support.
3. Not Building Capital First
Before a bank or another type of lender will consider lending, you need to have a significant amount of capital first. This might require you to start off working from home or as a mobile business. Start small, then build steadily and sustainably.
4. Applying for Smaller Bank Loans
Veteran business owners tend to apply for loans that are $100,000 or less. Loans of this size are difficult to get from larger banks. This points back to the benefit of building capital and reputation first, so you’ll more easily qualify for a larger loan.
5. Not Exploring Alternate Funding Sources
Sure, you can apply for a bank loan, but there are numerous alternatives to explore as well. Some of them include Warrior Rising Small Business Grants; the Service-Disabled Veteran-Owned Small Business Program; The StreetShares Foundation and Loans; the Veteran Readiness and Employment program; the Office of Small and Disadvantaged Business Utilization; and Boots to Business, a division of the SBA (Small Business Administration).
Veteran business owners have unique skills and traits to offer. Keep these factors in mind as you seek funding.