In the franchising sector, veterans are widely known as some of the strongest candidates for franchise ownership. The drive, discipline, and teamwork instilled by military service are invaluable qualities when running a small business.
As important as these qualities can be for business ownership, veterans face the same hurdles as most other franchise buyers — including funding.
To buy a franchise, you need enough capital to pay for your franchise fee and other startup costs. You may also need additional funds to give your business sufficient runway after opening.
Below, we’ll explore some of the top sources of veteran franchise funding. These options include business loans, small business grants, and franchise discounts, with a focus on funding options specific to veterans.
Veteran Franchise Loans
If you’re starting or operating a small business, you need access to capital. For many entrepreneurs, that means relying on loans for at least part of these funds. Whether you’re applying for an SBA loan or financing your business through a non-SBA lender, a loan can provide the funding you need for your business. As a veteran, you may also explore loan programs for veterans and military reservists, such as the Military Reservist Economic Injury Disaster Loan program.
SBA 7(a) Loans
Whether you’re a veteran or a civilian entrepreneur, SBA 7(a) Loans are an excellent source for small business financing.
SBA loans boast relatively low interest rates and investor-friendly payment schedules. They’re also partly guaranteed by the Small Business Administration, which can help first-time business owners acquire third-party financing.
7(a) loans are the most common type of loan offered by the SBA. Through this program, you can receive short-term or long-term loans for up to $5 million. These funds can be applied towards capital expenses such as real estate, refinancing business debt, or business supplies.
The SBA also offers an Express Loan program for loans of up to $500,000, with an accelerated application process.
While the SBA does not offer preferred rates to military veterans on these loans, they do provide expert resources, coaching, and guidance to veteran small business owners. These services are provided through Veterans Business Outreach Centers (VBOCs). The VBOC offers a Transition Assistance program for veterans transitioning into small business ownership.
Military Reservist Loan
In addition to 7(a) loans, the SBA also offers Military Reservist Economic Injury Disaster Loans (MREIDLs). These loans are provided to businesses with an essential employee who is a military reservist and is called to active duty.
The loan is designed to compensate for economic injury to businesses in these situations by helping cover operating expenses. Loans can be awarded for up to $2 million. This maximum limit may be waived in exceptional circumstances.
Businesses can file at any time after the employee receives a notice of expected call-up. The filing window ends one year after the employee is relieved from active duty or discharged.
Veteran franchise buyers sometimes ask about Patriot Express loans, a special type of SBA loan for veteran-led businesses. While this program was an excellent source of financing for veterans, the program was sadly discontinued.
If you’re not eligible for an SBA loan, you may still be able to secure financing through a third-party lender. Non-SBA loans may come with higher interest rates, less favorable payment schedules, and greater risk for business owners.
While 13% of U.S. small business owners report using personal or business credit cards to finance startup capital, we discourage franchise owners from this option. Credit cards can be a great way to pay for short-term expenses, but they can turn into a financial and legal liability if misused.
Before agreeing to a loan, we strongly encourage entrepreneurs to speak with a financial advisor and/or a legal expert.
Veteran Franchise Grants
As the owner of a veteran-led business, you may qualify for grants from nonprofits like the Second Service Foundation and Warrior Rising. Both organizations are focused exclusively on support for business owners who are U.S. military veterans.
Second Service Foundation
The Second Service Foundation is a nonprofit organization that seeks to inspire, educate, and support veteran business owners. The foundation is an affiliate of StreetShares, a tech company that focuses on small business loans.
As part of their support, the Second Service Foundation offers grants through its Military Entrepreneur Challenge. Participants are invited to submit a video pitch outlining their business plan. Qualifying participants are then invited to pitch their business to a judging panel at a live event.
The Military Entrepreneur Challenge offers the following cash awards:
- $15,000 to first place
- $6,000 to second place
- $4,000 to third place
Warrior Rising is a veteran-led nonprofit that supports veteran entrepreneurs. U.S. military veterans can apply for support through the Vetrepreneur program. This support includes online education, biweekly webinars, and one-on-one mentoring opportunities.
The Vetrepreneur program also awards grants through Business Showers, in which nominated businesses compete for funding in a Shark Tank-style competition.
In addition to business grants for veterans, you may also want to pursue other grants that aren’t specifically focused on vets.
Many of these grants can be found through Grants.gov, a searchable database of grant opportunities within the U.S. The database includes hundreds of funding opportunities for small businesses.
Veteran Franchise Discounts
As a veteran, you may be eligible for reduced upfront costs when buying a franchise, depending on which brand you choose.
VetFran is a network of franchise brands that offer incentives for veteran entrepreneurs. These incentives often include veteran discounts on franchise fees. This can significantly reduce your initial investment when buying a franchise.
At Senior Helpers, we offer a 15% discount on our franchise fee for U.S. military veterans. Our veteran franchise discount reduces the cost of a home care franchise by $8,250 — from $55,000 down to $46,750!
Our veteran discount is just one of the reasons why Senior Helpers ranks among the best franchising opportunities for veterans.
Thanks to our service-focused mission and values, we give veterans the chance to build a business while continuing to serve their community. We also offer one of the home care industry’s leading training programs, giving military veterans the support they need to transition into business ownership.
Finally, if you’re concerned about finance options for your business, our franchise development specialists can point you in the right direction. Our team has many buyers navigate third-party financing, including veteran franchisees.
Learn more about veteran franchise opportunities with Senior Helpers today! Contact us online or schedule a 15 minute phone call to get started