Navy Federal Small Business Loan: 2021 Review

Navy Federal Credit Union offers the same variety of small business financing options that you would find at a national bank, but you must be a member in order to take advantage of them. If you have ties to the U.S. military and strong personal credit or an established business, it may be worth seeing if you qualify since credit unions typically provide lower rates and other benefits. We can’t say if that’s the case for all Navy Federal small business loans because it does not publicly provide all rates and terms, but we’ll tell you what we do know about each of its products.

What Navy Federal offers

The largest U.S. credit union by assets, Navy Federal offers a variety of business loans, including SBA loans, plus a line of credit as well as a business credit card.

Navy Federal Small Business Loans
Secured Term Loans
  • APR: Not available
  • Amount: Up to 75% value for equipment and used commercial vehicles; up to 80% for for new commercial vehicles; up to 90% for used business vehicles; up to 100% for new business vehicles
  • Terms: Typically up to 60 months
  • Fees: $150 origination fee; lien search and recording fees may apply
Business Line of Credit
  • APR: Variable
  • Amount: > $100,000
  • Terms: Flexible
  • Fees: $325 annual fee for equity up to $100,000; 0.50% origination fee for limits over $100,000; lien search and recording fees
Real Estate Loans
  • APR: Fixed or variable
  • Loan amount: Up to 80% of property value
  • Terms: Up to 60-months term, 20-year amortization
  • Fees: May include appraisal, environmental study, origination fee, document preparation, title, pest inspection and attorney fees

Term loans
Term business loans from Navy Federal are secured. The maximum term loan amount for businesses less than 2 years old is $25,000.

Business line of credit
Navy Federal may require you to secure your business line of credit against your receivables, inventory or real estate. The credit union also offers a checking line of credit, which can help protect against overdrafts. The maximum you may borrow with the checking line is $5,000, with a maximum APR of 17.90%. It also comes with a $50 annual fee.

Real estate 
Real estate loans are available for commercial real estate, investment properties, mixed-use property and renovations. Navy Federal lends up to 80% of the total property value for owner-occupied purchases or refinances but only up to 75% for investment properties. If you’re planning to renovate an existing commercial property, Navy Federal lends up to 65% of the value.

Business and commercial vehicles
Vehicle loans are available for business and commercial vehicles, whether new, used or refinanced. All small business vehicle loans come with no fees. Commercial vehicle loans can be used to purchase heavy-duty vehicles, semi-trucks, trailers and other hauling equipment.

Compare Free Business Loan Offers

Should you apply?

Navy Federal offers a variety of small business financing options with flexible terms, but if your loan or line of credit comes with a variable interest rate, the eventual rate change could make it difficult to repay your debt. If you’re looking for fixed rates, you may want to see how other small business lender reviews compare to Navy Federal business loan reviews.

It may also be a challenge to qualify for financing if your business is less than two years old. Unless you have strong personal credit and personal cash flow, your application may be declined or Navy Federal may require you to back your loan with collateral.

Pros

  • Loans available for a wide variety of uses including working capital, real estate, equipment and commercial or business vehicles.
  • No prepayment penalties for any small business loans and no fees for vehicle loans.
  • Navy Federal provides additional support for veterans, including VA mortgage loan servicing, financial literacy services and banking product discounts.

Cons

  • Like many other credit union business loans, membership is required. Membership requirements would apply to all owners. If your business partners don’t have military connections, they would not qualify — see more below.
  • Preapproval is not available.
  • A Navy Federal small business loan may not be best if you prefer in-person banking. While the credit union has a network of 30,000+ free ATMs, there are only 343 physical branches worldwide.

  • Minimum credit score required: Not disclosed
  • Time in business required: 2 years or business owner must have excellent personal credit and cash flow
  • Collateral required: Varies, depending on loan type. May include accounts receivable, a general lien or real estate. You may also need to sign a personal guarantee.

Once you become a member of Navy Federal, you’ll need to make a deposit of either $100 or $105 before applying for a business loan.

You’ll then need to supply certain documents based on your business structure:

Required documents by business type

Sole Proprietor Partnership Corporation Single Member LLC Multi-Member LLC
Business License x
Federal TIN Letter x x
Fictitious Name Certificate or Certificate of Assumed Name (if applicable) x x x x x
Partnership Agreement x
Beneficial Owner Form x x x x
Articles of Incorporation x
Corporate Bylaws x
Articles of Organization x x
Operating Agreement x x

The type of loan you’re applying for determines additional paperwork you’ll need to submit including:

  • Term loans: Purchase invoice or buyer’s order and a certificate of insurance in the case of equipment or other collateral used to secure the loan.
  • Business line of credit: Two most recent years of personal and business tax returns, financial statements, and in some cases, your business plan.
  • Real estate loans: Three most recent years of business tax returns and personal tax returns for all owners, personal financial statements for all owners, debt schedules and applicable contracts or agreements.
  • Vehicle loans: Purchase invoice or buyer’s order, certificate of insurance, mileage statement and payoff statement.

Personal credit is also taken into consideration.

How to apply for Navy Federal financing

For loans up to $50,000 you can apply and upload the required documents online, but you’ll have to talk to a representative to apply for larger amounts or to apply for a business line of credit.

Once all of the required application materials are submitted, NFCU approves or declines most requests within 5 business days.

Business owners must be individual members of Navy Federal before becoming business members. Membership is available to individuals in the following groups or programs:

  • Active-duty (all military branches)
  • Delayed Entry Program (DEP)
  • DoD Officer Candidate/ROTC
  • DoD Reservists
  • Veterans, retirees and annuitants
  • Immediate family members (parents, grandparents, spouses, siblings, children and grandchildren) and household members of the above
  • Department of Defense civilians

Individuals can apply for membership online, over the phone or in person.