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How Veterans Can Get Money to Open a Business or Franchise (and How the Top Lending Options Work)

How Veterans Can Get Money to Open a Business or Franchise (and How the Top Lending Options Work)

Starting a business or buying a franchise is one of the most powerful ways veterans can build long-term income, control their schedule, and create a mission-driven career after service. The good news is that veterans often have access to more capital pathways than the average entrepreneur—including SBA-backed loans, VA self-employment support programs, nonprofit grants, and specialized veteran lending resources.

 

The challenge is that the funding landscape can be confusing. Many veterans hear about “SBA loans” or “veteran grants” but don’t fully understand what’s realistic, what’s available today, how the approval process works, or how different funding options compare.

 

This article provides a clear breakdown of the most common ways veterans fund a business or franchise, the pros and cons of each method, and the step-by-step process to secure financing.

 

Important note: This is general information and not legal or financial advice. Always confirm requirements with your lender, SBA resource partners, or the VA.
Read more on why Veterans make Great Franchisees and Entrepreneurs:  https://americanveteranfranchises.com/success-stories-in-franchising-for-veterans-how-military-experience-translates-into-business-ownership/

 

1) SBA Loans: The Most Common Funding Path for Veteran Franchise Buyers

For veterans purchasing a franchise or opening a small business, SBA-backed loans are usually the most powerful funding tool. Why? Because the SBA doesn’t lend money directly (in most cases)—it guarantees a portion of the loan, which reduces risk for banks and allows borrowers to access longer terms and better rates than many conventional loans.

 

The SBA also publishes and maintains veteran-focused guidance and resource support for veteran-owned businesses.

 

A) SBA 7(a) Loans (Most common for franchises)

Best for: franchise fees, working capital, equipment, leasehold improvements, buying an existing business

Why it works for franchises: the 7(a) program is flexible and widely used for franchise acquisitions.

 

How it works

 

Typical uses in franchising

 

Terms

 

SBA fees (important update)

SBA 7(a) loans include guaranty fees and annual service fees, and SBA updates these schedules by fiscal year. SBA revised and published FY2025 7(a) fees for loans approved between March 27, 2025 and September 30, 2025.
That means veterans should confirm the current fee schedule at the time of application.

 

Pros

 

Cons

 

B) SBA Express Loans (Faster SBA option)

Best for: smaller funding needs, quick access to capital, working capital, equipment
SBA Express loans are designed for speed and simplicity (relative to traditional SBA loans), with a streamlined process.

 

Why veterans often look at SBA Express

 

Veteran Advantage and fee relief

The SBA has historically offered Veteran Advantage incentives that reduce or eliminate SBA guaranty fees for qualifying veterans on some SBA loans (including SBA Express). Many lender and SBA resources reference that SBA Express guaranty fees may be reduced to 0% for qualifying veterans under Veteran Advantage.
Always confirm current eligibility with your lender and SBA guidance.

 

Pros

 

Cons

 

C) SBA 504 Loans (Best for real estate or large equipment)

Best for: buying a building, purchasing large equipment, long-term fixed assets
If a veteran wants to buy a facility or invest in major fixed assets, 504 can be a strong option.

 

How it works

 

Pros

 

Cons

 

2) VA Veteran Readiness & Employment (VR&E) — Self-Employment Track

Many veterans are unaware that the VA offers a pathway that can support business ownership through its Veteran Readiness and Employment (VR&E) program, including a Self-Employment Track for eligible veterans.

 

According to the VA, the self-employment track is designed for veterans with a service-connected disability and an employment barrier who want to operate a business and may need a more accommodating work environment.

 

How VR&E Self-Employment Support Works

VR&E may provide resources such as:

 

This is not a universal “business grant,” and it’s not guaranteed funding. It is a structured benefit program that requires:

 

Pros

 

Cons

 

3) Veteran Small Business Grants (Nonprofit and Private Grants)

Grants are attractive because they don’t need to be repaid, but they are also:

 

A) Second Service Foundation (formerly StreetShares Foundation)

One well-known organization in the veteran entrepreneur ecosystem is Second Service Foundation (formerly StreetShares Foundation). They provide coaching, resources, and capital programs for veteran entrepreneurs.

 

You’ll also see references to the StreetShares Veteran Small Business Award, often cited as offering awards in the range of $4,000–$15,000 (varies by program cycle and eligibility).

 

Pros

 

Cons

 

4) Conventional Bank Loans (Without SBA Backing)

Some veterans choose conventional financing if they have strong credit, significant collateral, or existing revenue.

 

Pros

 

Cons

 

Conventional loans tend to work best when:

 

5) Online Lenders and Alternative Capital (Speed vs. Cost)

Alternative lenders include:

 

These options can be faster but often cost more.

 

Pros

 

Cons

 

Best practice: Use alternative financing strategically and avoid high-cost capital that could damage unit economics early in a franchise launch.

 

6) Franchise Brand Financing and Preferred Lender Networks

Many franchise brands offer:

 

This can help veterans access financing faster because lenders may be familiar with the franchise concept and model.

 

Pros

 

Cons

 

Veterans should ask franchisors:

 

7) Home Equity, ROBS, and Personal Capital Strategies

Many franchise deals involve a combination of:

 

Veterans may fund the down payment through:

 

A) ROBS (Rollovers for Business Startups)

A ROBS arrangement can allow you to invest retirement funds into a business without early withdrawal penalties—if structured correctly.

 

Pros

 

Cons

 

Veterans should consult a qualified professional before using ROBS.

 

B) Home Equity / HELOC

Using home equity can provide capital for down payments or working capital.

 

Pros

  • Flexible use

 

Cons

 

8) Microloans and Community-Based Lending

Veterans starting smaller businesses or needing a capital bridge may use:

 

These are often best for:

 

Microloans can be helpful for veterans who are:

 

9) Crowdfunding and Friends/Family Investment

These options can work as supplemental funding but should be structured carefully.

 

Pros

 

Cons

 

For franchising, lenders and franchisors generally prefer clean ownership structures, so equity from friends/family should be documented carefully.

 

10) How These Lending Options Work (Step-by-Step Funding Process)

If a veteran is pursuing a franchise or business loan, the pathway usually looks like this:

 

Step 1: Choose the right business model (and validate it)

Lenders want to know:

 

Step 2: Prepare your personal financial profile

Most lenders evaluate:

 

Step 3: Build a strong business plan and loan package

A good loan package includes:

 

Step 4: Select the lending option and lender

Many veterans start with:

 

Step 5: Underwriting and documentation

Expect:

 

Step 6: Funding and execution

Once approved, the capital is distributed based on:

 

11) Key Tips for Veterans to Improve Funding Approval

 

✅ Show leadership experience and operational capability

Veterans often have leadership strength. Translate military experience into:

 

✅ Bring liquidity and reserves

Lenders like to see cash beyond the down payment.

 

✅ Choose a proven franchise model

Franchise brands with track records often receive better lender confidence.

 

✅ Use veteran support resources

The SBA and veteran business programs offer support resources and guidance for veteran-owned businesses.

 

✅ Plan for the new SBA underwriting reality

Recent reporting notes SBA loan underwriting and fee rules have tightened in some ways in recent periods, making preparation and documentation even more important.

 

12) The Best Funding Strategy for Most Veteran Franchise Buyers

In real-world franchise funding, the most common veteran-friendly approach is:

SBA Loan (7a or Express) + Down Payment (cash or ROBS) + Optional Grant Support

 

Why this works:

 

Veterans Have More Options—But Strategy Matters

Veterans have access to multiple pathways to business ownership capital. The best path depends on your:

 

The strongest veteran funding strategies are built around:

 

Whether you pursue SBA loans, VA self-employment support, grants, or alternative lending, the goal is the same: secure funding that allows you to launch with enough runway to stabilize and grow.

 

To find franchises for Veterans, visit American Veteran Franchises:

https://americanveteranfranchises.com/explore/

 

For more information on funding options for Veterans, contact Franchise Funding Solutions:

https://franchisefundingsolutions.com/contact/