This loan program is intended to serve those who have served our country by helping them successfully operate a business. The SBA hopes to encourage lenders to work with veteran-owned small businesses by backing this VA business loan program and reducing certain fees.
As a 7(a) loan, an SBA Veterans Advantage Guaranteed Loan can be used for a variety of purposes. Funds can cover working capital, commercial equipment, real estate, and corporate acquisition. It cannot be used for a handful of reasons like repaying delinquent taxes and participating in an activity that is not considered “sound” by the SBA.
SBA 7(a) loans have no set minimum and can span up to $5 million. The SBA guarantees up to 85 percent of the value of the loan with a cap of $3.75 million. Lender fees range from 0.25 to 3 percent. Interest rates vary, and the business and the lender can negotiate the rates. However, they cannot exceed the maximums set forth by the SBA. Borrowers make monthly payments on a combination of principal and interest.