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Patriot Express Veterans Small Business Loans

Veterans who want to start a business should checkout the Patriot Express Veterans Small Business Loan program. Patriot Express is administered by the SBA (Small Business Administration).The SBA Patriot Express Pilot Loan Initiative provides loans for veterans who want to start a small business or expand a small business they already own.

Patriot Express is a pilot program that officially started in June 2007, but it didn’t really get off the ground and start making loans until February 2008. Because it’s a pilot program, nobody knows how long it will last. If you’re a veteran and you're thinking of starting your own small business, you may want to get in while the getting is good.

Which veterans small businesses qualify for Patriot Express?

The definition of a small business is the same for veterans as it is for other business people. When the U.S. Congress first established SBA, the fundamental question was just what numerical definition SBA should use to define small businesses, industry by industry, to determine what businesses were eligible for SBA’s programs.

Over the years SBA has established and revised numerical definitions for all for-profit industries, and this numerical definition is called a size standard.

The most common size standards are as follows:

  • 500 employees or fewer for most manufacturing and mining industries

  • 100 employees or fewer for all wholesale trade industries

  • $6.5 million or less for most retail and service industries

  • $31 million or less for most general and heavy construction industries

  • $13 million or less for all special trade contractors

  • $750,000 or less for most agricultural industries

If you plan to apply for a loan through the Patriot Express program, your business must meet one of these standards.

How much can a veteran borrow under Patriot Express?

You can borrow up to $500,000 under the Patriot Express program. The SBA will guarantee up to 85 percent of the borrowed amount for loans of $150,000 or less and up to 75 percent for loans over $150,000 up to $500,000.

The U.S. government doesn’t actually lend you the money. Instead, it guarantees a large percentage of your loan to the lender. In other words, if you default, the government repays the lender the lion’s share of the loan. Think of it as having your favorite Uncle Sam as your co-signer.

You don’t need to provide collateral for many loans, but for loans above $350,000, lenders are required to take all available collateral.

Interest rates can vary, depending on certain factors, but the SBA guarantees it will use its lowest small business loan rates under the Patriot Express program. These rates are generally 2.25 to 4.75 percent over prime, depending on the loan’s size and time to maturity. Interest rates are usually on the high end for larger loans and loans with a longer repayment period.

Which veterans are eligible for Patriot Express?

Most veterans, and even some spouses of veterans, are eligible for the Patriot Express program.

Eligibility includes:

  • Veterans (except those with a dishonorable discharge)

  • Service-disabled veterans

  • Active-duty members eligible for the military’s Transition Assistance Program. This includes military retirees within 24 months of separation and other active-duty members within 12 months of separation.

  • Reservists and National Guard members

  • Current spouses of any of these folks

  • The widowed spouse of a service member or veteran who died during service or of a service-connected disability

Do veterans need to create a small business plan?

Even though you're a qualified veteran, you can’t just walk into a lender and get a small business loan, even under the guarantees of programs such as Patriot Express. The lender wants to know that your business is likely to succeed and that you’ll be able to repay the loan. In other words, they want to see a solid business plan.

A business plan precisely defines your business, identifies your goals, and serves as your firm’s resume. Its basic components include a current and pro forma balance sheet, an income statement, and a cash flow analysis.

A business plan helps you allocate resources properly, handle unforeseen complications, and make the right decisions. Because it provides specific and organized information about your company and how you will repay borrowed money, a good business plan is a crucial part of any loan package. Additionally, it tells your sales personnel, suppliers, and others about your operations and goals.

Writing a solid business plan isn’t an easy task, so you'll probably need help. The SBA has an excellent tutorial on writing the perfect business plan for your small business. You can access the tutorial online at the SBA's website.

To find a lender that works with the SBA's Patriot Express program, contact your local SBA district office.

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