Getting a loan as a veteran isn’t always easy. Many of the traditional requirements, such as credit rating, time in business and business references, are hard for U.S. vets to meet. This isn’t surprising considering these hard-working men and women have often spent their years following graduation abroad. Fortunately, there are still options available for veterans looking to open startups.
Startup Lines of Credit or Credit Cards
One option for obtaining funding while building up a good credit rating is to apply for secured lines of credit or credit cards. These options rely on alternatives to secure the business financing, such as a bank account or vehicle. Often, this type of option only provides a low spending limit at first, and as business owners start showing they can manage the credit responsibly, the cap gets raised gradually.
Lines of credit for startups aren’t usually enough to cover all the needs of a budding business, but they can help with some essentials at the beginning, such as inventory purchases or equipment leases.
Things are much easier for returning veterans if they have family members for support. Many families aren’t aware that helping veterans become responsible entrepreneurs doesn’t always mean providing funds. Support can also mean helping loved ones meet loan requirements.
With some types of alternative financing, if the business doesn’t meet credit score requirements yet, that doesn’t mean automatic rejection. If one of the business partners has a qualifying personal credit score, it’s possible to authorize the transaction.
Of course, if the veteran already has a good reputation for being responsible and trustworthy with financial matters, friends and family members may also agree to lend some money. This type of interest-free loan can make a big difference for startups, even if the amount is relatively small. Pooling together $3,000-$5,000 is the equivalent of a small business microloan, and it may be enough to get a one-person business off the ground.
Business Opportunities With Low Capital Requirements
When veterans are deciding which type of business to open, they need to keep capital requirements in mind. Some industries are more expensive than others. For example, retail has many expenses, from hiring costs and point-of-sale systems to inventory needs and building leases. On the other hand, becoming a certified handyman or real estate broker may only require short-term training and licensing.
Every step of the way, veterans should highlight any relevant management experience. This can tip the scales for startup success.