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Office of Small & Disadvantaged Business Utilization

Funding and Financing

Money puzzle

VA does not make loans or grants for the startup or expansion of a small business.  The Small Business Administration (SBA) is the agency that has been tasked with small businesses financing, for which they have several loan programs established.

Loan Fees Waived For Veterans Who Use SBA Express

Veterans will get a break on Small Business Administration loans beginning January 1, 2014.  SBA is also charging zero fees on all loans of less than $150,000.  Read more »

Economic Development Grants/Loans

Economic development grants or loans are typically provided by municipal, regional or state agencies that target specific areas for new business.  These loans are sometimes also provided by private concerns.  The best place to locate these types of financing are through your state’s economic development organization or through the Council for Urban Economic Development.  In an effort to improve their local economies, most states, and many municipalities and counties, sponsor a variety of public funding sources for Small Business concerns.  At the state level, nearly all states have some form of state economic development agency and/or state finance authority that make loans or loan guarantees to small businesses.

Family and Friends/Collateralized Loans and Credit Cards

According to the SBA, the overwhelming majority of startups are financed by family and friends, collateralized loans, and credit cards.


Grants are a form of funding for specific federal research and social programs.  Contrary to popular belief, there are no Federal grants made specifically for the purpose of starting a business.  Organizations can use the website to electronically find and apply for competitive grant opportunities from all Federal grant-making agencies. is THE single access point for over 900 grant programs offered by the 26 Federal grant-making agencies.


All small business loans are determined on a basis of credit-worthiness.  Financial institutions take into account several factors including:  a business profile, description of how loan funds will be used, collateral offered, business financial statements and personal financial statements.  Generally, small business loans are repaid in five to seven years.  There are several SBA small business loan programs established, which are described on the SBA Financing web site.

National Association of Development Companies

The National Association of Development Companies (NADCO) is the trade association of Certified Development Companies (CDCs) — companies that have been certified by the Small Business Administration (SBA) to provide financing for small businesses under the Certified Development Company Economic Development Loan Program or the SBA 504 Program The SBA 504 loan program was created for two reasons:  (1) To provide financing to entrepreneurs who are ready to buy or build a facility, and (2) for the purpose of stimulating economic development through job creation, business growth and increased tax revenues.  A simple way to describe an SBA 504 loan is as a mortgage for small business owners to “purchase homes” for their businesses. Visit NADCO to find basic information on SBA 504 Loans and how one can work for you!

Patriot Express Loan

On June 14th, 2007, SBA launched a loan program for Veterans called Patriot Express.  The Patriot Express Loan, part of the SBA 7(a) small business loan program, provides financial assistance for Veterans and members of the military community who want to establish or expand small businesses.  More information can be found at the SBA Express & Pilot Programs web site.  Local SBA district office will also have a listing of lenders in your area (800-827-5722).

Preferred Lenders

Preferred Lenders are financial institutions chosen from among SBA’s best lenders and have full delegation of lending authority for a lower rate of guaranty.  Preferred lenders have a maximum SBA guarantee of 75%.  Preferred lenders account for ten percent of SBA loans.

Prompt Pay Act

The Prompt Payment Final Rule (formerly OMB Circular A-125, "Prompt Payment") requires Executive departments and agencies to pay commercial obligations within certain time periods and to pay interest penalties when payments are late.  On June 17, 1998, the Office of Management and Budget (OMB) requested comment on proposed revisions to the Circular.  The Circular was revised to reflect the increased use of electronic commerce in the Federal government and the private sector and to reflect the requirements of the Debt Collection Improvement Act (DCIA) of 1996.  Comments were received from 21 entities, including 15 Federal agencies, five vendors, and one university.  After considering the comments received, OMB issued final rule 5 CFR 1315 on September 29, 1999.

State Programs

State Commerce Departments often have direct or participating loan programs that may be even more attractive than SBA-guaranteed loan programs.  Also, don’t forget to check local colleges, universities, or trade schools to see if they have any Small Business assistance programs.  Some institutions, with the help of public funding, provide business “incubator” programs that can include consulting, marketing, services, facilities, and financing opportunities to local businesses as part of the institution’s business education program.  These types of financing are available to everyone.  You may also want to check with your local Veteran’s Service Organization, such as the American Legion, to see if they know of anything specifically targeted at Veterans in your area.  Another place to find information on these types of financing is your local Small Business Development Center (SBDC).

Venture Capital Funds

In some cases, venture capital funds or other private investors may invest in a startup company.  All investment and lending decisions are made by the financial institutions.

Veterans Business Fund (VBF)

The Veterans Business Fund (VBF) is a not-for profit organization.  It was established in response to the high unemployment rate among Veterans, many of whom are well qualified through their military experience to become successful small business owners but lack sufficient equity capital to qualify for a small business loan.

VBF was established to assist Veterans by providing them with the supplemental capital required to satisfy the equity requirements for a small business loan.  The VBF provides capital to veterans in the form of a non interest bearing loan with very favorable repayment terms.  All principal paid to The Fund will be made available to future Veteran entrepreneurs who also require assistance in meeting the equity requirements for small business loans.  The VBF is supported by Syracuse University’s Burton Blatt Institute; the International Franchise Association’s VetFran Program; SCORE supported by SBA to provide counseling to small businesses; and many other organizations and programs.

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