The Small Business Administration offers the Patriot Express Pilot Loan for veterans and members of the military community who want to start a business. These loans are available for many business needs, including start-up, inventory, equipment purchases, or growth and working capital.
Patriot Express Loan: Eligibility
Military and community members eligible for a loan include:
• Veterans, other than those dishonorably discharged
• Veterans with service connected disabilities
• Current spouses of any of these
• Spouses of a service member or veteran who died on active duty or of a service-connected disability
• Active duty military members who qualify for the Transition Assistance Program for retirees within 24 months of retirement and active duty members within 12 months of being discharged
Patriot Express Loan: Details
The Patriot Express Pilot loan is offered by a wide network of SBA lenders nationwide. Most local SBA offices will have a listing of Patriot Express lenders.
With less paperwork for the lender and a fast turnaround time for a decision, the Patriot Express loan can be filed electronically.
The SBA has Patriot Express loans for up to $500,000. These loans qualify for the SBA’s guaranty of 85 percent for loans of $150,000 or less and 75 percent for loans from $150,000 to $500,000.
Those who are eligible for a loan and who have a business idea can use a simple self-assessment to determine whether their idea is doable. The Checklist for Starting a Business is a comprehensive tool designed to analyze the participant’s responses in key areas and providing a menu of supporting resources.
Lenders are required to determine each borrower’s eligibility using approved Department of Defense or Veterans Administration documentation which must be furnished to the SBA with any purchase request.
The SBA leaves all credit decisions to the lender, but requires lenders to use the same existing, established and sensible loan practices it uses for any other small business loan. The SBA will also use the lender’s established, sensible policy for its other business loans as to hazard insurance and appraisals.
Patriot Express Loan: Rules
The veteran must use an approved SBA lender and submit the necessary Patriot Express loan paperwork. The borrowing company must be at least 51 percent owned by a veteran or member of the military community.
Along with the standard loan documents, the SBA recommends those seeking a Patriot Express loan to use their Starting a Business Guide to help those applying for a loan understand how to start up, finance, and increase a business. These guidelines are important when applying for the Patriot Express loan.
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
To apply for a loan through the Patriot Express program, the business must meet one of these standards.
For smaller loans, the veteran won’t need to provide collateral, but for loans over $350,000, lenders are required to accept all available collateral.
Patriot Express Loan: Small Business Plan
As a qualified veteran, a person can’t just walk into a lender and get a small business loan, even with the guarantees in programs such as Patriot Express. The SBA lender will want assurances that the business is likely to succeed and that the veteran will be able to repay the loan. A business plan provides this information.
A business plan precisely defines the business, identifies goals, and serves as the company’s resume. Its basic components include a current and pro forma balance sheet, an income statement, and a cash flow analysis.
A business plan can help the veteran distribute resources correctly, take care of unexpected complications, and make the right decisions to make the business profitable. Because it can provide specific and systematic information about the business and how the loan will be repaid, a good business plan is a crucial part of any loan package.
Writing a solid business plan isn’t an easy task, so help will probably be needed. The SBA has a tutorial on writing the perfect business plan for a small business which can be accessed online at the SBA’s website.