How to Find Your Best VA Business Loan Options in 2017

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Veteran-owned businesses make up just under 10 percent of all businesses in the U.S., according to a 2017 report by the Small Business Administration. Despite veterans’ propensity toward entrepreneurship, funding options for veteran-owned business can be difficult to find. According to the same report, nearly 60 percent of veterans’ startup or acquisition capital comes from personal or family savings, while less than 10 percent comes from loans from federal, state, or local government, government-backed business loans from banks, or business loans from banks or other financial institutions.

Obtaining startup financing is always a challenge, but veterans may have an especially difficult time. Because their housing, transportation, and many other daily necessities are handled by the military, they may not have built credit while actively serving.

Fortunately, many organizations, including the U.S. Department of Veterans Affairs (VA) and the U.S. Small Business Administration (SBA) have stepped up to provide resources for veteran entrepreneurs. In this guide, we’ll take a look at the options available for current veteran business owners and veterans looking to start their own business.

Traditional bank loans

Borrowers who bank with a financial institution that caters to military members should talk to a loan officer at their bank first.

Navy Federal Credit Union provides small business financing of up to $50,000 through a combination of term loans, business credit cards, vehicle loans, and business checking lines of credit. A four-page application is available on their website and can be submitted online.

Fort Knox Federal Credit Union, which is available to active duty military, reserve, National Guard, and civil service employees and retired military or civil service members, provides SBA-backed commercial real estate loans. You can request more information by filling out a Commercial Loan Request Form online.

Tammy Everts, a certified business adviser with the Spokane Small Business Development Center, says borrowers with a good credit score seeking a loan of less than $150,000 may be able to qualify for a loan based on their credit score alone. “Talk to your commercial banker where you already have a relationship,” Everts says. “If you’re denied there, then you can expand your search.”

SBA-guaranteed loans

Neither the VA nor the SBA loan money directly to veteran entrepreneurs, but the SBA does guarantee small business loans for veterans. This means that should the business default on the loan, the government will pay a portion of the remaining balance back to the lender. This guarantee encourages banks to lend to applicants that might otherwise be considered too great a risk.

Everts says veterans, unfortunately, have fewer options than they did a few years ago. Prior to 2013, the SBA offered the Patriot Express Loan targeted at helping veterans and active duty military with loans up to $500,000. That program ended, but Everts says it was rolled into the SBA Express Program under the name SBA Veterans Advantage

To qualify, the business must be owned and controlled (51 percent or greater) by a veteran.

The SBA defines a veteran as:

  • Veterans (not those dishonorably discharged)
  • Active-duty military participating in the Transition Assistance Program (TAP)
  • Reservists and National Guard members
  • Current spouses of any veterans, active duty service members, reservists, or National Guard members and widowed spouses of any service members who die while in service or of a service-connected disability.

To document eligibility, the borrower must provide a copy of Form DD 214 or other documentation as outlined in SBA Information Notice 5000-1390. Eligible veterans have four options under the Veterans Advantage Program:

SBA Express loans of $150,001 to $350,000

  • No upfront fees
  • Two-page application and response within 36 hours
  • The SBA guarantees 50 percent of the amount borrowed

SBA 7(a) loans $150,000 and under

  • No upfront fees through 9/30/17 (typically 1.5 percent of the guaranteed portion)
  • Terms up to 10 years for equipment and up to 25 years for real estate
  • The SBA guarantees 85 percent of the amount borrowed

Non-SBA Express loans $150,001 to $500,000

  • The upfront fee is 50 percent less than the fee charged to non-veteran owned small businesses as follows:
    • Loans with terms greater than 12 months: fee is 1.5 percent of the guaranteed portion
    • Loans with terms of 12 months or less: fee is 0.125 percent of the guaranteed portion

Loans of $500,001 to $5 million

  • For loans of $500,001 to $700,000, upfront fee is 3 percent of the guaranteed portion
  • For loans of $700,001 to $5 million, upfront fee is 3.5 percent of the guaranteed portion up to $1 million, plus 3.75 percent of the guaranteed portion over $1 million

Note that for all but the Express Loan, the reduced fees are applicable only for loans made until September 30, 2017. The fee waiver has been extended in the past, but there is no guarantee it will be extended again.

Interest rates on all SBA loans are negotiated between the lender and the borrower.

How to apply

To apply for an SBA-backed loan, borrowers can use the Lender Match tool available on the SBA’s website. Everts says qualifying for an SBA Veterans Advantage loan isn’t really different from other bank loans. “The bank will expect a 15 percent cash contribution from the business owner and a good credit score,” Everts says. “With a credit score over 700, the borrower may be able to get a loan with very little paperwork.

Nonprofit lenders

Nonprofit lenders can often provide small business funding when traditional banks won’t.

CDC Small Business Financing VetLoan Advantage

CDC Small Business Financing’s VetLoan Advantage Program is available to veterans looking to purchase commercial or industrial buildings and equipment.

The VetLoan Advantage loans are backed by the SBA, but they offer lower down payments (typically 10 percent). Mike Owen, Chief Credit Officer and Director of Business Development for CDC Small Business Finance, says CDC provides a cash rebate of up to $3,000 to help veterans offset loan expenses. Borrowers can prequalify for a loan online.

The Jonas Project

The Jonas Project provides startup funding, training, and mentorship for veteran women. To qualify, applicants must be a U.S. military veteran with honorable discharge verification, demonstrate knowledge or skill in their desired field of business, and pass an extensive interview and qualification process. Applications are available online.

Veterans Business Fund

Veterans Business Fund (VBF) was established to assist veterans by providing them with the supplemental capital required to satisfy the equity requirements for a small business loan. VBF loans are non-interest bearing.

Currently, the VBF is not accepting applications until their necessary fundraising is complete, but borrowers should check back in the future to find out more about the application process and requirements.

Microloans

If your borrowing needs are modest, a microloan may be the way to go. Microloans typically range from $500 to $100,000, although the definition of a microloan varies by lender.

Kabbage, a microlender that has provided over $3 billion in funding to more than 100,000 businesses, has a microloan program designed specifically for veteran-owned businesses. Borrowers can apply online or through the Kabbage mobile app for a line of credit up to $150,000.

Angel investment groups

Angel investors are affluent individuals who provide capital for a business startup, usually in exchange for ownership equity in the business. Some angel investors organize themselves into angel investment groups to share research, pool their investment capital, and provide advice to their portfolio companies.

Hivers and Strivers is a Great Falls, Va.-based angel investment group that focuses on investing and supporting startups founded and run by graduates of U.S. military academies. The group concentrates on investing $250,000 to $1 million in a single round, although they can work with other investment groups when larger financing rounds are needed.

Their investors, most of whom have also served in the military and have a broad range of experience in different industries and business models, will also serve as board members and advisers to the businesses they finance. Borrowers can submit their idea for consideration online.

Online lenders

Online lending platforms (sometimes referred to as peer-to-peer lending) are online services that match lenders with borrowers. Because they typically run with lower overhead, they often provide loans with better terms than traditional financial institutions.

StreetShares is an online lending platform that focuses on connecting veteran-owned and -run businesses with investors. They offer three different funding solutions:

Term loans

  • Loan amounts from $2,000 to $100,000
  • Terms of three to 36 months

Patriot Express line of credit

  • Lines of credit from $5,000 to $100,000
  • Terms of three to 36 months

Contract financing

  • Based on future earnings
  • No limit on contract amount

StreetShares only loans to borrowers who have been in business for at least one year and have “reasonable” credit. Borrowers can get pre-approved in minutes, and there is no application fee.

Grants

Grants are attractive to entrepreneurs without a lot of cash available to start or grow a business because, unlike a loan, the funds do not have to be repaid.

StreetShares Foundation

The StreetShares Foundation awards $10,000 in business grants to veterans and military spouses each month. Applicants must be a veteran, reserve, or active duty member of the U.S. armed forces or a spouse of a military member or veteran. Selection criteria are based on the business idea, use of funds and potential impact, product-market fit, team and company history, and influence of the business on the military and veterans community.

Applicants must qualify for the award by downloading or viewing educational materials, then complete an online application that includes writing a 300-word summary of the business and submitting a short video about the project or company.

USDA Outreach and Assistance for Socially Disadvantaged Farmers and Ranchers and Veteran Farmers and Ranchers Program (a.k.a The 2501 Program)

The U.S. Department of Agriculture provides small business grants, education, training, outreach, and other forms of support to veterans and minorities looking to begin or expand agricultural operations. Funding opportunities are closed for 2017.

Veterans can also search for additional grant opportunities through grants.gov; however, Everts says her office typically counsels people to bootstrap their business because the process of searching and applying for grants can take a significant amount of time.

Other small business financing options for veterans

While funding is important, it’s often not the only resource veterans need to successfully start or grow a business. Here’s a look at some other great resources:

Boots to business

The Boots to Business entrepreneurial program is offered by the SBA. The curriculum includes a two-day classroom course on entrepreneurship as well as an eight-week online course with in-depth instruction on preparing a business plan and starting a business.

At the end of the eight-week online course, participants will have the tools and knowledge they need to identify business opportunities, draft a business plan, and launch a small business.

Veteran’s Business Outreach Center

Also funded by the SBA, Veteran’s Business Outreach Centers are a resource for service members, veterans, and military spouses looking to start, purchase, or grow a business. Centers are located in 17 states.

Business counselors at the outreach centers provide mentorship and work with veteran entrepreneurs on business plans, feasibility analysis, and provide training on franchising, marketing, accounting, and more.

Syracuse University Institute for Veterans and Military Families

The Institute for Veterans and Military Families hosts conferences and provides training for veterans transitioning to civilian life. Their initiatives include:

Entrepreneurship Bootcamp for Veterans with Disabilities

Available to post-9/11 veterans with a service-connected disability. The boot camps feature a 30-day online program, nine days of live training, and 12 months of post-program support.

Bootcamp for Veterans Families

Available to military families who serve in a caregiver role to a veteran with a service-connected disability. The boot camps feature a 30-day online program, nine days of live training, and 12 months of post-program support.

Veteran Women Igniting the Spirit of Entrepreneurship

Women veterans and female military spouses can receive entrepreneurship and small business management training through Veteran Women Igniting the Spirit of Entrepreneurship. This three-phase program includes a 15-day online course, a three-day entrepreneurship training event, ongoing mentorship, training, and support opportunities for graduates launching or growing a business.

There is a one-time $75 registration fee for the program, but the SBA covers a two-night hotel stay for event attendees and all meals and educational materials during the conference. Veterans can view the program calendar and apply online.

VetFran

The International Franchise Association created VetFran, a strategic initiative to teach veterans about becoming a franchise business owner. Veterans and their spouses can get help figuring out whether franchising is right for them and search a directory of franchises, many of which offer discounts or grant free franchises to veterans.

American Corporate Partners

American Corporate Partners connects post-9/11 veterans to corporate mentors from companies such as Deloitte, Morgan Stanley, AT&T, Coca-Cola, and Intel for year-long, one-on-one corporate mentoring. Mentors help veterans with small business development, professional communication and leadership skills, and career development.

The program is open to service members, veterans, and spouses who meet the following eligibility criteria:

  • Currently serving and recently separated veterans who have served on active duty orders for at least 180 days since 9/11.
  • Surviving spouses and spouses of severely wounded post-9/11 veterans.
  • Service members who served less than 180 days of active duty since 9/11, but who were injured while serving or training.

Applications can be completed online.

SCORE Veteran Fast Launch Initiative

SCORE (previously known as the Service Corps of Retired Executives) is a nonprofit association of thousands of volunteer business counselors throughout the U.S. Their Veteran Fast Launch Initiative provides mentoring and training to veterans transitioning to entrepreneurs. The program is a package of free software combined with mentoring aimed at helping veterans and their families start and succeed as small business owners.

In addition to templates and tools to help veterans plan and operate their businesses, veterans also receive five hours of free financial advice from a CPA.

National Veteran-Owned Business Association

The National Veteran-Owned Business Association (NaVOBA) doesn’t provide funding for veteran-owned small businesses, but it does provide networking opportunities for veteran entrepreneurs, encourages the federal government to spend their contract dollars with veteran-owned businesses, and advocates with state governments to pass laws creating opportunities for veteran-owned businesses.

The Bunker

The Bunker is an incubator for veteran-owned technology startups. They have local chapters throughout the U.S. that provide educational programming, resources, and networking for military veterans and their spouses interested in starting and growing a business. Their EPIC Entrepreneurial Program is a 12-week course designed to help participants launch a business.

The exact information you’ll need and qualifications to be approved for a loan depends on the funding option you’re interest in and the bank you’re working with. Some have simple applications and quick approval processes. Others will want to see collateral, business plans, personal financial statements, bank statements, and credit scores. Whatever funding opportunity you pursue, Everts recommends taking some time to prepare before applying. “Get your numbers in a row and know how much you can contribute to the business,” she says.

The post How to Find Your Best VA Business Loan Options in 2017 appeared first on MagnifyMoney.

The Best Mortgages That Require No or Low Down Payment

 

If you’re considering buying a home, you’re probably wondering how much you’ll need for a down payment. It’s not unusual to be concerned about coming up with a down payment. According to Trulia’s report Housing in 2017, saving for a down payment is most often cited as the biggest obstacle to homeownership.

Maybe you’ve heard that you should put 20% down when you purchase a home. It’s true that 20% is the gold standard. If you can afford a big down payment, it’s easier to get a mortgage, you may be eligible for a lower interest rate, and more money down means borrowing less, which means you’ll have a smaller monthly payment.

But the biggest incentive to put 20% down is that it allows you to avoid paying for private mortgage insurance. Mortgage insurance is extra insurance that some private lenders require from homebuyers who obtain loans in which the down payment is less than 20% of the sales price or appraised value. Unlike homeowners insurance, mortgage protects the lender – not you – if you stop making payments on your loan. Mortgage insurance typically costs between 0.5% and 1% of the entire loan amount on an annual basis. Depending on how expensive the home you buy is, that can be a pretty hefty sum.

While these are excellent reasons to put 20% down on a home, the fact is that many people just can’t scrape together a down payment that large, especially when the median price of a home in the U.S. is a whopping $345,800.

Fortunately, there are many options for homebuyers with little money for a down payment. You may even be able to buy a house with no down payment at all.

Here’s an overview of the best mortgages you can be approved for without 20% down.

FHA Loans

An FHA loan is a home loan that is insured by the Federal Housing Administration. These loans are designed to promote homeownership and make it easier for people to qualify for a mortgage. The FHA does this by making a guarantee to your bank that they will repay your loan if you quit making payments. FHA loans don’t come directly from the FHA, but rather an FHA-approved lender. Not all FHA-approved lenders offer the same interest rates and costs, even for the same type of loan, so it’s important to shop around.

Down payment requirements

FHA loans allow you to buy a home with a down payment as low as 3.5%, although people with FICO credit scores between 500 and 579 are required to pay at least 10% down.

Approval requirements

Because these loans are geared toward lower income borrowers, you don’t need excellent credit or a large income, but you will have to provide a lot of documentation. Your lender will ask you to provide documents that prove income, savings, and credit information. If you already own any property, you’ll have to have documentation for that as well.

Some of the information you’ll need includes:

  • Two years of complete tax returns (three years for self-employed individuals)
  • Two years of W-2s, 1099s, or other income statements
  • Most recent month of pay stubs
  • A year-to-date profit-and-loss statement for self-employed individuals
  • Most recent three months of bank, retirement, and investment account statements

Mortgage insurance requirements

The FHA requires both upfront and annual mortgage insurance for all borrowers, regardless of their down payment. On a typical 30-year mortgage with a base loan amount of less than $625,500, your annual mortgage insurance premium will be 0.85% as of this writing. The current upfront mortgage insurance premium is 1.75% of the base loan amount.

Casey Fleming, a mortgage adviser with C2 Financial Corporation and author of The Loan Guide: How to Get the Best Possible Mortgage, also reminds buyers that mortgage insurance on an FHA loan is permanent. With other loans, you can request the lenders to cancel private mortgage insurance (MIP) once you have paid down the mortgage balance to 80% of the home’s original appraised value, or wait until the balance drops to 78% when the mortgage servicer is required to eliminate the MIP. But mortgage insurance on an FHA loan cannot be canceled or terminated. For that reason, Fleming says “it’s best if the homebuyer has a plan to get out in a couple of years.”

Where to find an FHA-approved lender

As we mentioned earlier, FHA loans don’t come directly from the FHA, but rather an FHA-approved lender. Not all FHA-approved lenders offer the same interest rates and costs, even for the same type of loan, so it’s important to shop around.

The U.S. Department of Housing and Urban Development (HUD) has a searchable database where you can find lenders in your area approved for FHA loans.

First, fill in your location and the radius in which you’d like to search.

Next, you’ll be taken to a list of FHA-approved lenders in your area.

Who FHA loans are best for

FHA loans are flexible about how you come up with the down payment. You can use your savings, a cash gift from a family member, or a grant from a state or local government down-payment assistance program.

However, FHA loans are not the best option for everyone. The upfront and ongoing mortgage insurance premiums can cost more than private mortgage insurance. If you have good credit, you may be better off with a non-FHA loan with a low down payment and lower loan costs.

And if you’re buying an expensive home in a high-cost area, an FHA loan may not be able to provide you with a large enough mortgage. The FHA has a national loan limit, which is recalculated on an annual basis. For 2017, in high-cost areas, the FHA national loan limit ceiling is $636,150. You can check HUD.gov for a complete list of FHA lending limits by state.

SoFi

For borrowers who can afford a large monthly payment but haven’t saved up a big down payment, SoFi offers mortgages of up to $3 million. Interest rates will vary based on whether you’re looking for a 30-year fixed loan, a 15-year fixed loan, or an adjustable rate loan, which has a fixed rate for the first seven years, after which the interest rate may increase or decrease. Mortgage rates started as low as 3.09% for a 15-year mortgage as of this writing. You can find your rate using SoFi’s online rate quote tool without affecting your credit.

Down payment requirements

SoFi requires a minimum down payment of at least 10% of the purchase price for a new loan.

Approval requirements

Like most lenders, SoFi analyzes FICO scores as a part of its application process. However, it also considers factors such as professional history and career prospects, income, and history of on-time bill payments to determine an applicant’s overall financial health.

Mortgage insurance requirements

SoFi does not charge private mortgage insurance, even on loans for which less than 20% is put down.

What we like/don’t like

In addition to not requiring private mortgage insurance on any of their loans, SoFi doesn’t charge any loan origination, application, or broker commission fees. The average closing fee is 2% to 5% for most mortgages (it varies by location), so on a $300,000 home loan, that is $3,000. Avoiding those fees can save buyers a significant amount and make it a bit easier to come up with closing costs. Keep in mind, though, that you’ll still need to pay standard third-party closing costs that vary depending on loan type and location of the property.

There’s not much to dislike about SoFi unless you’re buying a very inexpensive home in a lower-cost market. They do have a minimum loan amount of $100,000.

Who SoFi mortgages are best for

SoFi mortgages are really only available for people with excellent credit and a solid income. They don’t work with people with poor credit.

SoFi does not publish minimum income or credit score requirements.

VA Loans

Rates can vary by lender, but currently, rates for a $225,000 30-year fixed-rate loan run at around 3.25%, according to LendingTree. (Disclosure: LendingTree is the parent company of MagnifyMoney.)

Down payment requirements

Eligible borrowers can get a VA loan with no down payment. Although the costs associated with getting a VA loan are generally lower than other types of low-down-payment mortgages, Fleming says there is a one-time funding fee, unless the veteran or military member has a service-related disability or you are the surviving spouse of a veteran who died in service or from a service-related disability.

That funding fee varies by the type of veteran and down-payment percentage, but for a new-purchase loan, the funding fee can run from 1.25% to 2.4% of the loan amount.

Approval requirements

VA loans are typically easier to qualify for than conventional mortgages. To be eligible, you must have suitable credit, sufficient income to make the monthly payment, and a valid Certificate of Eligibility (COE). The COE verifies to the lender that you are eligible for a VA-backed loan. You can apply for a COE online, through your lender, or by mail using VA Form 26-1880.

The VA does not require a minimum credit score, but lenders generally have their own requirements. Most ask for a credit score of 620 or higher.

If you’d like help seeing if you are qualified for a VA loan, check to see if there’s a HUD-approved housing counseling agency in your area.

Mortgage insurance requirements

Because VA loans are guaranteed by the Department of Veterans Affairs, they do not require mortgage insurance. However, as we mentioned previously, be prepared to pay an additional funding fee of 1.25% to 2.4%.

What we like/don’t like

There’s no cap on the amount you can borrow. However, there are limits on the amount the VA can insure, which usually affects the loan amount a lender is willing to offer. Loan limits vary by county and are the same as the Federal Housing Finance Agency’s limits, which you can find here.

HomeReady

 

The HomeReady program is offered by Fannie Mae. HomeReady mortgage is aimed at consumers who have decent credit but low- to middle-income earnings. Borrowers do not have to be first-time home buyers but do have to complete a housing education program.

Approval requirements

HomeReady loans are available for purchasing and refinancing any single-family home, as long as the borrower meets income limits, which vary by property location. For properties in low-income areas (as determined by the U.S. Census), there is no income limit. For other properties, the income eligibility limit is 100% of the area median income.

The minimum credit score for a Fannie Mae loan, including HomeReady, is 620.

To qualify, borrowers must complete an online education program, which costs $75 and helps buyers understand the home-buying process and prepare for homeownership.

Down payment requirements

HomeReady is available through all Fannie Mae-approved lenders and offers down payments as low as 3%.

Reiss says buyers can combine a HomeReady mortgage with a Community Seconds loan, which can provide all or part of the down payment and closing costs. “Combined with a Community Seconds mortgage, a Fannie borrower can have a combined loan-to-value ratio of up to 105%,” Reiss says. The loan-to-value (LTV) ratio is the ratio of outstanding loan balance to the value of the property. When you pay down your mortgage balance or your property value increases, your LTV ratio goes down.

Mortgage insurance requirements

While HomeReady mortgages do require mortgage insurance when the buyer puts less than 20% down, unlike an FHA loan, the mortgage insurance is removed once the loan-to-value ratio reaches 78% or less.

What we like/don’t like

HomeReady loans do require private mortgage insurance, but the cost is generally lower than those charged by other lenders. Fannie Mae also makes it easier for borrowers to get creative with their down payment, allowing them to borrow it through a Community Seconds loan or have the down payment gifted from a friend or family member. Also, if you’re planning on having a roommate, income from that roommate will help you qualify for the loan.

However, be sure to talk to your lender to compare other options. The HomeReady program may have higher interest rates than other mortgage programs that advertise no or low down payments.

USDA Loan

USDA loans are guaranteed by the U.S. Department of Agriculture. Although the USDA doesn’t cap the amount a homeowner can borrow, most USDA-approved lenders extend financing for up to $417,000.

Rates vary by lender, but the agency gives a baseline interest rate. As of August 2016, that rate was just 2.875%

Approval requirements

USDA loans are available for purchasing and refinancing homes that meet the USDA’s definition of “rural.” The USDA provides a property eligibility map to give potential buyers a general idea of qualified locations. In general, the property must be located in “open country” or an area that has a population less than 10,000, or 20,000 in areas that are deemed as having a serious lack of mortgage credit.

USDA loans are not available directly from the USDA, but are issued by approved lenders. Most lenders require a minimum credit score of 620 to 640 with no foreclosures, bankruptcies, or major delinquencies in the past several years. Borrowers must have an income of no more than 115% of the median income for the area.

Down payment requirements

Eligible borrowers can get a home loan with no down payment. Other closing costs vary by lender, but the USDA loan program does allow borrowers to use money gifted from friends and family to pay for closing costs.

Mortgage insurance requirements

While USDA-backed mortgages do not require mortgage insurance, borrowers instead pay an upfront premium of 2% of the purchase price. The USDA also allows borrowers to finance that 2% with the home loan.

What we like/don’t like

Some buyers may dismiss USDA loans because they aren’t buying a home in a rural area, but many suburbs of metropolitan areas and small towns fall within the eligible zones. It could be worth a glance at the eligibility map to see if you qualify.

At a Glance: Low-Down-Payment Mortgage Options

To see how different low-down-payment mortgage options might look in the real world, let’s assume a buyer with an excellent credit score applies for a 30-year fixed-rate mortgage on a home that costs $250,000.

As you can see in the table below, their monthly mortgage payment would vary a lot depending on which lender they use.

 

Down Payment


Total Borrowed


Interest Rate


Principal & Interest


Mortgage Insurance


Total Monthly Payment

FHA


FHA

3.5%
($8,750)

$241,250

4.625%

$1,083

$4,222 up front
$171 per month

$1,254

SoFi


SoFi

10%
($25,000)

$225,000

3.37%

$995

$0

$995

VA


VA Loan

0%
($0)

$250,000

3.25%

$1,088

$0

$1,088

HomeReady


homeready

3%
($7,500)

$242,500

4.25%

$1,193

$222 per month

$1,349

USDA


homeready

0%

$250,000

2.875%

$1,037

$5,000 up front,
can be included in
total financed

$1,037

Note that this comparison doesn’t include any closing costs other than the upfront mortgage insurance required by the FHA and USDA loans. The total monthly payments do not include homeowners insurance or property taxes that are typically included in the monthly payment.

ANALYSIS: Should I put down less than 20% on a new home just because I can?

So, if you can take advantage of a low- or no-down-payment loan, should you? For some people, it might make financial sense to keep more cash on hand for emergencies and get into the market sooner in a period of rising home prices. But before you apply, know what it will cost you. Let’s run the numbers to compare the cost of using a conventional loan with 20% down versus a 3% down payment.

Besides private mortgage insurance, there are other downsides to a smaller down payment. Lenders may charge higher interest rates, which translates into higher monthly payments and more money spent over the loan term. Also, because many closing costs are a percentage of the total loan amount, putting less money down means higher closing costs.

For this example, we’ll assume a $250,000 purchase price and a loan term of 30 years. According to Freddie Mac, during the week of June 22, 2017, the average rate for a 30-year fixed-rate mortgage was 3.90%.

Using the Loan Amortization Calculator from MortgageCalculator.org:

Assuming you don’t make any extra principal payments, you will have to pay private mortgage insurance for 112 months before the principal balance of the loan drops below 78% of the home’s original appraised value. That means in addition to paying $169,265.17 in interest, you’ll pay $11,316.48 for private mortgage insurance.

The bottom line

Under some circumstances, a low- or no-down-payment mortgage, even with private mortgage insurance, could be considered a worthwhile investment. If saving for a 20% down payment means you’ll be paying rent longer while you watch home prices and mortgage rates rise, it could make sense. In the past year alone, average home prices increased 16.8%, and Kiplinger is predicting that the average 30-year fixed mortgage rate will rise to 4.1% by the end of 2017.

If you do choose a loan that requires private mortgage insurance, consider making extra principal payments to reach 20% equity faster and request that your lender cancels private mortgage insurance. Even if you have to spend a few hundred dollars to have your home appraised, the monthly savings from private mortgage insurance premiums could quickly offset that cost.

Keep in mind, though, that the down payment is only one part of the home-buying equation. Sonja Bullard, a sales manager with Bay Equity Home Loans in Alpharetta, Ga., says whether you’re interested in an FHA loan or a conventional (i.e., non-government-backed) loan, there are other out-of-pocket costs when buying a home.

“Through my experience, when people hear zero down payment, they think that means there are no costs for obtaining the loan,” Bullard says. “People don’t realize there are still fees required to be paid.”

According to Bullard, those fees include:

  • Inspection: $300 to $1,000, based on the size of the home
  • Appraisal: $375 to $1,000, based on the size of the home
  • Homeowners insurance premiums, prepaid for one year, due at closing: $300 to $2,500, depending on coverage
  • Closing costs: $4,000 to $10,000, depending on sales price and loan amount
  • HOA initiation fees

So don’t let a seemingly insurmountable 20% down payment get in the way of homeownership. When you’re ready to take the plunge, talk to a lender or submit a loan application online. You might be surprised at what you qualify for.

The post The Best Mortgages That Require No or Low Down Payment appeared first on MagnifyMoney.

4 Secrets to Become a Successful Veteran Government Contractor

Veterans can use these tips to help their small businesses succeed.

The U.S. government constantly adjusts and grows as new needs arise. The government needs an army of contractors to support its massive consumption requirements. As a result, the benefits available through government contracts are abounding. Veteran contractors are perfect candidates to fill this growing landscape because of their previous employment by the government. They’ve also learned lessons, acquired tools, and made contacts from your military experience that could be valuable in the government contracting space.

The demand is real and possibilities are substantial, but not every step will be easy. If you’re a veteran, here are some secrets to help you become more successful.

1. Build Relationships

As with any venture in life, relationships are key to your success in establishing and maintaining government contracts, bidding on contracts and getting government contract financing. While the government is a huge consumer, there is a lot of competition to break into this space. As veterans, you have a leg up on your competition because the government sets aside procurement specifically for veteran-owned small businesses. But how do you know where to start or what’s available for veterans?

This is where relationships come into play. Relationships with leaders of businesses you’re interested in bidding for will give you an advantage in securing a contract later. You have to be willing to put yourself out there to grow you network.

For veterans, a good place to start building those connections is to know what events are going on at a local base near you and in the veteran community. These could include open houses at college campuses or companies, events at your local Veteran Business Outreach Center or local contracting incubators like Eastern Foundry.

Get yourself out there, get in the mix, and make connections that will enable you to win contracts. This is not an industry you should enter alone.

Building relationships with government contract financing partners at an early stage can also be helpful.

2. Team Up With a Prime Contractor

While building relationships and making connections individually with fellow veterans and businesses may be all the help you need, for some, the contracts you’re bidding on will need more resources than your company alone can provide. Maybe you’ve done a ton of networking and you’re still not winning contracts. In either of these cases, teaming up with a prime contractor may change all of that.

A prime contractor is the owner of the project and has full responsibility for its completion. They may do the work themselves or hire other contractors, known as subcontractors, to carry out specific parts of the contract.

Working With a Contract Officer

Your small business has to move from “unknown” to “known” in the government contracting space. Many contracts you bid on can have several proposals per contract. The contract officer’s time is valuable. They’re the ones who are working on the contract day in and day out. They administer the full life of the contract and can even terminate it. So building relationships with contract officers can take time. If you’ve teamed up with a well-known prime contractor, the contract officer may already know them. So, it may be more likely they will choose your bid.

Become a Subcontractor

This is why teaming up can be helpful. For example, there may be large, well-known government contractors who would take you in as a subcontractor if your specialty fills a need for them. You’re able to get a foot in the door, gain experience and start proving the excellence of your product, all with the end game becoming a “known” business.

Government Contract Funding

Another hidden benefit of teaming up is that it might help ease the financial burden of the contract as well. With multiple parties involved, the expenses no longer rest solely on your small business’ shoulders. Leverage your relationships and strategically partner to expand your business’ possibilities.

3. Make Word of Mouth Work for You

It can be easy to feel discouraged as a veteran small business owner when you only seem to win small contracts because you don’t have enough revenue for bigger contracts.

Hone Your Strategy

We encourage you to not feel disheartened about winning smaller contracts. Changing your business from an “unknown” to a “known” in the government contracting space can be hard. You have to build relationships. You might have to partner with a larger parent company. But you should stick to your guns and hone your strategy. Do each job with diligence and excellence, no matter how small it may seem.

Any contract you win gives you a chance to prove the worth of your company and your product. If you take every small contract you win and complete it in a high quality manner, those smaller jobs may earn your company a good reputation, which might help you break into larger circles. If you’ve made the companies and customers you’ve worked for happy, they might be willing to refer your services to someone else, who might refer you to someone else and so on. Don’t stress about starting off small – you never know where a job well done might lead you.

4. Think About Your Government Contract Financing Plan

As with any business venture, know the financial facts from the get-go. Government contract financing is no exception because it can be tricky. It often takes a great deal of time to actually win a government contract. You have to establish yourself in various bidding spaces, such as FedBid. You might be looking at six to 12 months just to win the contract after you’ve made a bid.

Bidding Takes Time

There may be several months of negotiations once you’ve won the bid, before doing any work. If your contract provides a down payment, receiving the payment can sometimes take 30 to 75 days to arrive. The full payment comes only when the product is completed and received. It takes a long time between being awarded the contract and actually getting paid. Thinking about how you will afford the expenses accrued during this time better positions you and your business for long-term success.

The Contract Financing Challenge

Traditional bank loans present a challenge in this financial space because you don’t have much collateral to offer the bank as a small business owner. You may put your home or your child’s college fund at risk if a contract falls through. While credit cards are another financing option, they’re far from ideal. If you’ve been awarded multiple contracts but haven’t been paid yet, it’s possible to exceed your card limits. (See how credit card spending affects your finances with a free credit report snapshot on Credit.com.)

Another route contractors take is raising equity funds. However, this risks diluting the veteran’s business ownership to the point where a Veteran-Owned Small Business may no longer qualify for contracts set aside for veterans. Therefore, financing your government contract and veteran-owned small business through veteran business loans makes more sense.

How to Finance Your Government Contract

It’s important to think through exactly how you’re going to afford the expenses your business will face before you bid on a contract. Some invoice factoring or invoice financing providers, make the process painless. After you have provided your goods and services, your invoices to the government might be sold at a discounted or advanced rate of up to 90% to a finance company. You also have the option for recourse or non-recourse factoring, which means the financing company is willing or unwilling to take on certain risks. A good government contract financing partner may combine their invoice factoring options with term loans or lines of credit to mobilize funding and help you get started on the contract work.

This post was originally published on StreetShares.

Image: Steve Debenport

The post 4 Secrets to Become a Successful Veteran Government Contractor appeared first on Credit.com.

7 Tips for Funding Your Veteran-Owned Small Business

Veterans business owners face challenges when it comes to securing funding, but this advice could help.

Military veterans often face challenges when it comes to funding their business with a veteran small business loan, but finding capital that works for you is not impossible, especially when you have help. (Full Disclosure: I am the CEO and co-founder of StreetShares, a financing community for veteran business owners.)

If you find yourself in this situation, here are seven tips to help get you started on getting your business finances in order.

1. Assess Your Strengths & Weaknesses as a Borrower

Before you begin your search, make sure you know where your small business stands. How much funding do you need? How much can you afford to pay back each month? Are your margins higher than the interest rates?

It is also helpful to be realistic about your chances of accessing different funding options. Do you know your credit score? (If not, you can check it free on Credit.com.) How are the rest of your financials?

Finally, make sure your documents are in order. Have you filed your taxes? Do you have an updated balance sheet and income statement? Being prepared can save you time and grief later on. Follow these two easy steps to determine your financial needs.

2. Understand the Terrain Lenders Navigate

There’s a heap of regulations and internal policies that lenders must comply with in regards to small business funding that can make the lending experience hard and expensive for the borrower and the lender. It’s important to understand some of these factors that could affect your chances of getting funding.

For example, the lender must have access to capital on their end to be able to fund your loan. They also need the proper finances and marketing it takes to convince you to do business with them.

From the borrower’s perspective, here are a few things that should help you qualify for funding.

  • Earn the lender’s trust by displaying evidence of a good track record; you may have to find a way to convince lenders that you are trustworthy if your small business hasn’t yet established a good credit history (e.g., consistent, timely payback in the past).
  • Come to the table with assets to offer as collateral for the loan.
  • Have a compelling back-story in which you describe experiences and skills gained during your service that set you up for success.

Proper knowledge of both perspectives will help you have a better chance of smoothly navigating the early stages of funding.

3. Conduct Reconnaissance on the Options Available

While there may be a lending gap for veterans today compared with the veteran business loan options for veterans following World War II, technology is helping fill that gap with alternative online options. Make sure you research what’s available — from traditional banks to online lenders — and go with what makes sense for you given the stage of your business, your revenue and margins. Finally, make sure you understand what is offered: Some lenders charge 50% or more for loans, which few new businesses can afford.

4. Think Outside the Box

Funding can sometimes come from an unconventional source. Do you have a family member, friend, fellow veteran or schoolmate that made it big and would love to be part of your adventure? If you’re a young business, try a crowdfunding campaign or look for veteran small business grants, SBA loans or contests and awards for veteran entrepreneurs.

5. Connect with Veteran-Focused Mentoring Programs

Mentors provide insight and connections that can help accelerate the growth of your business, as well as teach you invaluable skills – such as how to present your business to potential investors. There are lots of great veteran-focused entrepreneurship mentoring programs out there, such as:

  • Bunker Labs is a program built by veterans to help veteran-owned tech startups launch and accelerate their businesses.
  • American Corporate Partners (ACP) is focused on helping military members as they transition into business. ACP will match veteran entrepreneurs with a mentor who shares the same personal and business interests for a 12-month mentoring program.
  • Entrepreneurship Bootcamp for Veterans with Disabilities is designed to help veterans launch and grow their businesses by leveraging skills veterans learned in the military and applying them to business ownership.
  • Some states have programs for veteran entrepreneurs. For example, Veterans Florida has developed an entrepreneurship program that offers a tuition-free, online and on-campus program. It’s designed to work around busy schedules, giving participants the option to access local resources such as business mentors at partner campuses.

6. Follow Through

You would never show up on a mission in the military without training for it and having a well-thought-through plan. You should take funding applications just as seriously — be responsive to questions from the lender you’re working with and prompt in delivering asked-for information.

Lenders work with a long list of businesses seeking funding. Small business owners should aim to make lenders happy to call them first thing in the morning.

7. Believe in Your Mission

Veterans bring skills, knowledge and grit to the table. Smart lenders know this makes you a high-value asset as a business owner, partner or borrower. As you grow your business, leverage your experiences in uniform and prove that you and your company are a worthwhile investment. You’ve got this.

This post was originally published on the StreetShares blog.

Image: Steve Debenport

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50 Ways to Honor the True Meaning of Memorial Day

It's more than hot dogs and hamburgers on the grill. Here's how you can celebrate the lives of the men and women who died serving their country.

If you’ve had a loved one die in military service, you especially understand the importance of Memorial Day, which honors the fallen men and women who served the United States. Whether you’ve lost a loved one or not, doing something to recognize the sacrifices of our fallen heroes this year can be a wonderful way to say thank you. We’ve rounded up a list of 50 ways you can honor the true spirit of Memorial Day.

1. Volunteer to Raise & Lower Cemetery Flags …

It may seem like a simple thing, but reaching out to your local cemetery, especially a veterans cemetery, can make a big difference, particularly in rural areas where there may be fewer family members of the men and women buried there living nearby and available to volunteer.

2. … Or to Help Maintain Cemetery Grounds

The same goes for cemetery maintenance. Helping to maintain the final resting place of fallen troops by volunteering to prune trees, mend cemetery flags, repair cemetery benches or pull weeds can make a big difference to visiting family members.

3. … Or to Greet Cemetery Visitors

The Department of Veterans Affairs suggests one way to make a difference this Memorial Day is to volunteer to greet families at special services at veterans cemeteries. Your thanks for their sacrifice can go a long way.

4. … Or to Play Taps

If you’re a bugler, you can also volunteer to play taps live for Memorial Day or even at veterans’ funerals throughout the year. Congress passed a law in 2000 to allow a recorded version of taps to be played at these funerals since there are more veterans funerals than buglers the military can provide. But many families prefer a live bugler, so there is still significant demand for your talents.

5. … Or to Clean Up a Grave Site

You’ve seen them — the untended graves of fallen veterans who have no family remaining. You can volunteer to keep these grave sites free of weeds and the headstones cleaned of dirt and debris. You can also volunteer to …

6. Place Flowers & Flags on Graves

Sure, there are veterans groups and others who do this, but you can always help them or make this simple gesture on your own.

7. Adopt a Grave Site

You can also make maintenance of a specific grave site official through the Adopt a Grave program. Volunteers take care of the graves of the fallen soldiers, keeping them debris-free and decorating them with flowers. Check with your local cemetery to see if they support the program.

8. Share Your Story

Whether it’s a post on social media, a letter to the editor of your local newspaper or a piece you wish to publish in a magazine or on a website, sharing your personal story of loss and remembrance is a wonderful way to memorialize your fallen veteran.

9. Share a Veteran’s Story

Likewise, telling another person’s story can be a wonderful way to recognize their sacrifice. Did your grandfather die in combat? A friend? A member of your community? Telling their story, especially when you can include photographs, can be a lovely reminder of what Memorial Day is all about.

10. Make a Recording for NPR’s StoryCorps

If your story is especially compelling, you may want to consider recording it. NPR’s StoryCorps stories are stored in the Library of Congress. You can learn more about StoryCorps here.

11. Join the Memorial Day Facebook Page

You can share stories and photos of your fallen hero here, plus see the posts of other military family members.

12. Donate Your Time …

There are literally dozens of volunteer opportunities to help veterans and military families. Check your local organizations today to see what you can do in your community.

13. … Or Your Money

The same goes for monetary donations. There are many worthy organizations. As you research which is right for you, you may come across some organizations which which you are unfamiliar. The site Charity Navigator provides information on how much of your donation will benefit that organization’s particular cause, rather than administrative costs, so you can be sure your money is making an impact.

14. … Or Your Blood

Your donation could be the difference in a family remembering their service member on Memorial Day, or thanking them personally on Veterans Day.

15. Make a Memorial Donation

If you have a fallen loved one, you can make your donation in their name.

16. Help a Surviving Family

If you’d like to help by providing support for families of the fallen, both the USO and the Tragedy Assistance Program for Survivors offer financial and emotional support to bereaved spouses and children of troops who have died serving their country.

17. Send Flowers

If you live in the New York metro area, you may want to consider sending a thank-you bouquet through the National Memorial Day Foundation, which will be placed at the New York City war memorials.

18. Help Out Living Service Members

Donating time or resources to a veterans organization, like the Wounded Warrior Project, can make a huge difference in the lives of surviving service members wounded during duty.

19. Write a Letter to an Active Duty Service Member

Writing letters to active duty military members is a time-honored tradition. It can mean a lot to the men and women far from their homes and families. There are several resources online to help you get your letter to service member.

20. Invite a Service Member Over for Your Cookout

Want to thank a service member in person? Why not have him or her over for your Memorial Day barbecue?

21. Observe a Moment of Silence

There’s an official National Moment of Remembrance at 3 p.m. local time on Memorial Day, but you can take a moment from your weekend activities whenever the time is right for you to reflect on the sacrifices of our fallen heroes.

22. Say a Prayer

If you’re religious, take time to say thanks for our fallen veterans.

23. Carry the Load

The Dallas Memorial March by “Carry the Load” is the organization’s flagship event, occurring over two days and honoring service members and their families for the sacrifices they make. Participants join in the Memorial March at any time during the two days and walk, even for just a few minutes.

24. Fly Your Flag – But Do So Properly

Proper flag etiquette prescribes that the Stars and Stripes be raised at half staff from sunrise until noon on Memorial Day, and then raised to full staff for the rest of the day.

25. Watch the National Memorial Day Concert …

This annual concert will be televised live on PBS from the West Lawn of the U.S. Capitol Sunday, May 28 at 8 p.m. EDT.

26. … Or Find a Concert Near You

Lots of cities and towns have their own musical remembrance for Memorial Day. Check your local listings to find what’s available in your area.

27. Join the Parade

Attend the National Memorial Day Parade in Washington, D.C., or find a local parade nearer to you.

28. Join the Rolling Thunder ‘Ride For Freedom’

If you love motorcycles, you may want to consider joining this giant biker brigade honoring our fallen veterans.

29. Attend a Memorial Day Service …

Check your local listings for services in your area.

30. … Or the National Service at Flanders Field

If you live in the D.C. metro area, you may wish to attend the national Memorial Day service.

31. … Or a Memorial Day Service Overseas

If you’re overseas, you don’t have to skip honoring our fallen veterans. There are dozens of American cemeteries around the world where fallen military members have been laid to rest. Many of these have Memorial Day services that are free and open to the public.

32. Buy a Buddy Poppy

Call your nearest Veterans of Foreign Wars post to find out where to purchase their handmade poppies. Your purchase provides compensation to the veterans who assemble the poppies, provides financial assistance in maintaining state and national veterans’ rehabilitation and service programs and partially supports the VFW National Home For Children.

33. Make a Patriotic Playlist

Don’t overlook your Memorial Day soundtrack. Here are several ideas to get you started:

  • America the Beautiful
  • Anchors Aweigh
  • The Army Goes Rolling Along
  • Battle Hymn of the Republic
  • Columbia the Gem of the Ocean
  • Fanfare for the Common Man
  • God Bless America
  • Hail Columbia
  • Library of Congress March
  • Marines’ Hymn

34. Watch a Military Movie

Why not watch a movie this Memorial Day that symbolizes exactly what the day is about — duty, sacrifice and grief. There are lots of recommendation lists online, but some of our favorites include Hamburger Hill, Saving Private Ryan, Platoon and Born on the Fourth of July.

35. Make Some Red, White & Blue Food

Just because you’re honoring the dead doesn’t mean you can’t have some tasty food as well. Check out Foodie Crush’s roundup of 50 patriotic treats that will be sure to make your guests remember the day’s focus.

36. Buy American

Do your part to support American businesses (many small businesses are owned by veterans) and buy American, especially on Memorial Day.

37. Get Active in Local Politics

Honoring the men and women who died for this country is wonderful, but civic responsibility helps ensure their sacrifice wasn’t in vain. Get involved in your local city or town council by running for office or attending open meetings. But don’t stop there. Do the same at the county or parish and even state levels.

38. Read About the History of Memorial Day

Sure, you know it’s about honoring our fallen veterans, but do you know the history of Memorial Day?

39. Read Aloud Logan’s General Order No. 11

If you want to make your Memorial Day moment of silence especially poignant, try reading the original order to recognize the dead afterward.

40. Teach Your Children About the Meaning of Memorial Day

Reminding your children of what the day is all about can help them appreciate the sacrifices made by our fallen veterans.

41. Read Memorial Day Speeches, Poems & More …

There are some amazing words written about our fallen heroes. If you want a few somber moments to reflect on their sacrifice, some of these pieces can help you do just that.

42. … Or Write Your Own

If you have any articles, essays, lyrics, poems, prayers or speeches relating to Memorial Day, consider donating a copy to be posted on usmemorialday.org.

43. Visit a National Military Park

Is there a historic battle site near you? Consider making a day trip to learn more about the battle and the sacrifices made there.

44. Visit the Tomb of the Unknown Soldier

If you’re near Washington, D.C., you could consider visiting the Tomb of the Unknown Soldier.

45. Visit the Alamo

The site of one of the most famous battles on American soil is a true testament to sacrifice.

46. Visit Pearl Harbor

If you’re in Hawaii, pay your respects at the Pearl Harbor Memorial.

47. Visit Military Memorials in Washington, D.C.

A day at these somber sites is a wonderful way to reflect on the sacrifices of our fallen veterans.

48. Visit the Flight 93 Memorial

The passengers on Flight 93 weren’t members of the military, but these ordinary citizens and crew members joined together in an extraordinary act of selflessness, giving their lives for their country and saving potentially thousands of others on Sept. 11. If you’re near the site in Pennsylvania, it can be a wonderful way to reflect on self-sacrifice for the greater good.

49. Visit Nearby Historical Markers

If you can’t make it to a battleground, monument or other historic site, consider a simple road trip to read some of the historical markers in your area. Many of them are about battles lost and won right here on American soil.

50. Join the Military

If service to your country is important to you, consider enlisting in one of the four main branches of the military, in the Coast Guard or joining the Army National Guard.

Image: gjohnstonphoto

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4 Great Financing Resources for Veteran Entrepreneurs

Starting a business certainly isn't easy, but veteran entrepreneurs have some resources they can look into tapping.

No one said starting a business would be easy. But if you served our country, chances are you may qualify for certain financial assistance that can lessen the burden.

According to the 2007 Survey of Business Owners data released in 2011, there were 2.45 million businesses with majority ownership by veterans. What’s more, they represented 9% of all U.S. firms. With veterans playing such a key role in our economy, it’s worth it to see what’s out there before bootstrapping (i.e., using your own money).

Of course, if you’re going to apply for financing, be sure check your credit. Many business loans, most notably business credit cards, require a personal guarantee, meaning a lender is going to look at your credit file before giving their approval. You can see where two of your credit scores stand by viewing your free credit report summary, updated every 14 days, on Credit.com. If you find your credit needs improving, try paying down high credit card balances, disputing credit reports errors and addressing delinquent accounts. (We’ve got a few more ways you can quickly boost your credit scores here.)

With that in mind, here are four financing resources veteran entrepreneurs can look into tapping.

1. Small Business Association

Perhaps the most established of the resources listed here, the Small Business Administration (SBA) offers several loan options for veteran-owned businesses.

“Depending on a borrower’s needs, these loans can be used for a variety of purposes,” and are guaranteed by the SBA, said Craig Heilman, deputy associate administrator, Office of Veterans Business Development, U.S. Small Business Administration. “Any small business can apply, and we encourage them to work with their district office or partners to get lender-ready.”

The SBA Veteran’s Entrepreneurship Act of 2015 “reduces the upfront borrower fee to zero dollars for eligible veterans and military spouses for SBA Express loans up to $350,000,” the administration’s site says. Leveraging Information and Networks to Access Capital (LINC) helps small business owners, including veterans, get in touch with advisers who specialize in microlending, smaller loans and real estate financing. To connect with an SBA-approved lender, you can visit the SBA’s website.

2. The Veterans Opportunity Fund

Launched in Maryland in October 2013 by TEDCO Capital Partners, which manages a family of venture capital funds, the Veterans Opportunity Fund (VOF) was designed to focus on service members specifically.

“It is our belief that veteran-owned business represent an attractive investment opportunity that, when proper due diligence is applied, can produce superior return on invested capital,” the site says. Not only are these veterans highly skilled — and highly disciplined — they’re committed to giving back to their country. Up to $3 million is up for grabs, so make sure your startup meets their criteria: Ideally you’re based on the East Coast, affiliated with technology and in the early revenue or testing stage.

3. The Veterans Business Resource Center

Though the St. Louis Veterans Business Center (VBRC) does not offer grants or financial aid per se, it does provide training on several aspects of entrepreneurship, from marketing to sales to business planning, and much more.

“There are adjusted fees for some classes, and clients who need on-site consulting are charged at a sliding scale,” the site says, but for the most part, there is little to no charge. “The VBRC emphasizes a distinctive veteran-to-veteran approach through extensive utilization of the many established and successful veterans in the St. Louis metropolitan area,” the site says. The organization focuses its efforts in Iowa, Kansas, Missouri and Nebraska. “This veteran-to-veteran approach permeates all aspects of VBRC’s services from training and consulting to advocacy, networking and mentoring,” the site says. 

4. Veteran Entrepreneur Portal

Though the Veterans Administration doesn’t offer financing programs for entrepreneurs, said Randy Noller, who works for the Department of Veterans Affairs, “our office of Small & Disadvantaged Business Utilization (OSDBU) does provide some help to veterans to get contracts with government agencies, etc.”

The Veteran Entrepreneur Portal (VEP), on the VA’s main site, makes it easier to locate Federal services online. Complete a questionnaire to see which government resources are best, or gather information directly on loans like the Fixed Assets CDC/504, which offer small businesses long-term, fixed-rate financing for major assets like land and buildings. You can also learn about CAPLines loans, which are ideal for meeting short-term working-capital needs.

Remember, whatever financing route you pursue, it’s important to read loan contracts carefully so you know exactly what you’re signing up for. You’ll also want to vet prospective lenders or offers thoroughly since, unfortunately, there are a lot of scammers out there that target vets. We’ve got more tips for veterans looking for a loan here.

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6 Solid Tips for Veterans in Need of a Loan

Veterans are faced with some unique money challenges. Fortunately, there are ways for them to get an affordable loan.

U.S. military members transitioning out of service can find themselves facing many unique money challenges. After all, duty to one’s country can understandably push personal money management to the back burner. Fortunately, there are steps veterans can take to secure the funding they need to achieve their financial goals.

Here are some tips for veterans looking to secure a mortgage, small business loan or other types of financing.

1. Know What Federal Benefits Are Available …

There are programs out there designed to help veterans and their families overcome the various money challenges that can arise when a family member is on active duty. For instance, veterans are eligible for VA home loans, which often feature no down payment, no mortgage insurance and flexible underwriting requirements. And there are various grants, loans and business development programs backed by the U.S. Small Business Administration that can help former military members and budding entrepreneurs.

Veterans can get acquainted with the general benefits available to them on the Veterans Benefits Administration website. Prospective entrepreneurs can begin looking into business financing by checking out the Small Business Administration’s Office of Veterans Business Development online.

2. Research All of Your Options

That’s not to say veterans should limit themselves to federal loan programs. For instance, when it comes to mortgages, “to be sure, VA loans aren’t the right fit for every veteran,” Chris Birk, a Credit.com contributor and director of education for Veterans United, a VA loan lender, said. “Understanding all of your mortgage options is also key to getting the best deal possible. Even veterans with sterling credit and a 20% down payment would benefit from comparison shopping between conventional and VA loans.”

3. Consider Financial Institutions That Cater to Vets …

If you do decide to go for a VA loan to buy a home, consider finding a mortgage lender who knows the ins and outs of that type of financing.

“VA loan market share has soared over the last decade, but it’s still a niche product for many lenders and real estate professionals,” Birk said. “Working with companies and professionals who know the ins and outs of VA loans can help ensure veterans get the most from this benefit.”

Similarly, you can look into finding a credit card issuer or bank that caters to former and current military members. (We’ve got a list of some of the better military credit cards here to help you get you started on your search.)

And there are several startups, venture capitalist funds and, even, angel investors out there that offer small business financing exclusively to veterans and military members that may prove worthwhile, depending on your financial situation.

4. … But Be Sure to Assess Your Finances Holistically

We say “depending on your financial situation” because it’s important to consider factors beyond your status as a veteran when making money decisions. Take credit cards as an example. Ultimately, the right one for you will be influenced by your current financial situation or goals. For instance, if you’re trying to pay a lot of debt, you might want to look into a balance-transfer credit card. 

The same thing applies when exploring other financing opportunities — just because you’re a veteran doesn’t mean products designed for veterans are going to be the ones that best need your financing needs.

5. Watch Out for Scams

Due to the money challenges some veterans face (often related to spending extended periods of time out of the country or relocating frequently), they often find themselves on a scammer’s radar. That’s why it’s a good idea to vet any business you’re thinking of getting a loan from before filling out applications. You can start by conducting a thorough search online or checking a company’s status with the Better Business Bureau.

6. Brush Up Your Credit

A good credit score can make all types of financing more affordable, so it’s a good idea to see where you stand before applying for a loan. You can get a free credit report snapshot, along with two free credit scores, updated every 14 days, on Credit.com. You can also pull your free credit reports from each of the major consumer credit reporting agencies each year at AnnualCreditReport.com.  

If you need to build credit, you can look into credit-builder loans or secured credit cards, which help people with thin files establish a history of using credit wisely. If you need to improve your credit, you can focus on paying down high credit card balances, disputing credit report errors and limiting applications for new credit, all of which can hurt your credit score.

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Report: 600,000 Veterans Could Go Without Health Insurance Next Year

changes-to-Medicaid

A new Urban Institute report predicts that more than 600,000 veterans will go without health insurance in 2017 unless there are policy changes to the Medicaid program. They point out that more than half of those veterans live in the 19 states that have not expanded Medicaid.

“If Medicaid expansion decisions do not change between now and 2017, we project that approximately 604,000 veterans will be uninsured in 2017 and that 54% will be living in states that have yet to expand Medicaid,” according to the report.

In May 2011, the Urban Institute, supported by the Robert Wood Johnson Foundation, began studying the effects the Patient Protection and Affordable Care Act of 2010 had on citizens. The findings in the September 2016 report are based off analysis of data from the 2011 – 2015 National Health Interview Survey (NHIS), 2013 – 2014 American Community Survey (ACS) and U.S. Census Bureau.

The report notes that, even with Medicaid expansion, thousands of veterans are going to be left without a way to pay for medical care, as they all aren’t eligible for care provided by the Department of Veterans Affairs. It estimates that 38% of veterans would become part of the “assistance gap,” meaning they are not in the low-income category that qualifies them for Medicaid, but are making too much money to qualify for federal Obamacare health insurance subsidies. (It’s important to note that Medicaid expansion doesn’t come without costs — states have to figure out a way to pay for it.)

The researchers predict that, while fewer than 1 in 10 uninsured veterans in certain states would qualify for Medicaid in 2017 based on current expansion plans, “a projected 47% would qualify if all 19 states chose to expand.”

How Medical Debt Can Affect You

Medical debt can become a major burden and may even damage your credit, no matter if you’re a veteran, on active duty or a civilian. This can complicate things when it comes time to get a mortgage, take out a loan for a car or even apply for a job (many employers look at a version of your credit report as part of the application process).

If you’re currently laden with medical debt, it’s a good idea to review your bills for any errors, like double charges or other incorrect entries, that may help that number come down. And, while it may be challenging, it’s important to remember that you need to make your bill payments on time to maintain good credit. (You can see how your medical debts are affecting your credit by taking a look at two of your free credit scores, updated every 14 days, on Credit.com and by getting copies of your free annual credit reports through AnnualCreditReport.com.) If you need assistance with paying these bills, consider talking with a professional to see what your options are.

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The Bill That Could Help Veterans’ Credit Scores

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Veterans experiencing credit problems could be in store for some good news. Lawmakers are looking to help ensure veterans’ credit scores don’t get dinged when they have late payments on medical bills.

The Protecting Veterans Credit Act (H.R. 1862), introduced last month by Reps. Randy Hultgren (R-Ill.) and John Delaney (D-Md.), would provide a 1-year grace period before medical bills for services received through the Department of Veterans Affairs (VA) Choice Program could be reported to the credit reporting agencies.

The bill is in response to the program, created in 2014, which made it possible for veterans to seek medical treatment outside VA clinics because of long wait times, according to TheHill.com. Many complaints have arisen that the VA is slow to make payments to these private doctors, which have reported the outstanding medical debts to credit bureaus, the political news site said.

The VA did not immediately respond to Credit.com’s request for comment on the bill.

The lawmakers say their bill will provide the VA with enough time to make payments on the bills, ensuring veterans’ credit scores aren’t unnecessarily and negatively impacted.

According to TheHill.com, Rep. Delaney said veterans already had to endure long wait times for treatment. “We shouldn’t destroy their finances on top of that,” he reportedly told the website.

Maintaining Your Credit 

Whether you’re a veteran, active military or a civilian, medical debt can ultimately damage your credit. And a low credit score can have a negative impact on your ability to buy a home, take out a car loan or even get a job.

You may be able to mitigate medical bill nightmares by reviewing billing statements closely for double charges, evaluating all the insurance, Medicaid and charity options available, and using your own low-interest credit card to pay for medical bills instead of opening a new account through the hospital (which typically carries high interest rates).

And to maintain good credit in general, it’s important to make your bill payments on time, keep your credit card debt to a minimum and check your credit regularly. You can view two of your credit scores for free, updated monthly, on Credit.com, and get your free annual credit reports through AnnualCreditReport.com.

If your credit is looking lackluster, you can generally improve your scores by disputing credit report errors (you can go here to learn how), paying down high credit card balances and limiting new credit inquiries while your score rebounds.

[Offer: Your credit score may be low due to credit errors. If that’s the case, you can tackle your credit reports to improve your credit score with help from Lexington LawLearn more about them here or call them at (844) 346-3296 for a free consultation.]

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