Bad credit can be a major obstacle to overcome for anyone looking to secure franchise loans. Veterans often have an even harder time accessing funds. As a former service member with poor credit, know that there are still options for you to secure franchise loans. Whether you want to open a child care franchise or a fast food one, you can receive the capital you need. Agencies like the SBA have realized how important it is to support veterans as they work to become business owners. That is why there are many programs in place now that provide loans to current and former military members. Keep reading for a guide to getting franchise loans for veterans with bad credit.
Improving Your Credit
Even though your credit score may not be high enough to secure franchise loans, show lenders that you are responsible by working to improve your report. In the case of veterans, many financial institutions are willing to look beyond a poor credit score if the applicant shows they are making progress in improving it. Make timely payments on your existing debts and pay more than the minimum amount. This shows lenders that you are responsible enough to repay a loan. While this is not the fastest way to secure capital for your franchise, a good credit score will be helpful in the future. As a veteran with bad credit looking to secure franchise loans, start by improving your credit to show lenders you are serious.
Franchise Sponsored Veteran Benefits
As a former service member, you can secure franchise loans in the form of franchise sponsored veterans benefits. There are a few franchises out there that offer veterans huge discounts. They also offer veterans benefits. Eligible veterans can receive up to 20% off initial franchise fees as well as 65% financing through the franchiser. These discounts and benefits are akin to an interest-free business loan granted by a bank. For the franchises that offer these benefits, their credit score requirements vary. However, if you can prove your credit is building, you can negotiate the terms of your franchise deal. Veterans with poor credit looking for franchise loans have the option to work with companies that offer franchise sponsored veteran benefits. Keep this in mind as you look into the promising franchises for veterans.
Veterans Advantage Guaranteed Loans
To help service members access franchise loans, the SBA has partnered with the Veterans Affairs department to create veterans advantage guaranteed loans. In addition to competitive rates, these loans include programs such as counseling and education. Also, veterans advantage guaranteed loans require lower down payments than typical loans. This program offers fee relief on loans of $150,000 or less. This means there are less obstacles for veterans like you to secure the funds they need for their franchise. Because this loan is sponsored by the SBA, lenders are more likely to be flexible with their credit requirements. As a service member looking to get capital for your business, you have a great option. Consider securing franchise loans through the veterans advantage guaranteed loans program.
Patriot Express Loan
Furthermore, in recent years the SBA has offered multiple types of franchise loans to service members in the form of patriot express loans. These loans require a lower down payment than other SBA loans, but include a higher rate of interest. However, this option is still designed for applicants who lack funds and have a low credit score. If you do have the capital for a higher down payment, consider looking for a typical SBA loan. For veterans and their spouses who have low credit and insufficient funds, the patriot express loan is a viable option for securing franchise loans.
Military Reservist Economic Injury Disaster Loans
Veterans whose businesses were impacted due to their absence during active duty can apply for military reservist economic injury disaster loans. This loan is intended only for veterans whose businesses struggled financially during their deployment. The MREIDL program offers loans with low interest rates designed to give veteran business owners a jump start. If you have been released from active duty in the past year, you qualify for this loan. However, the MREIDL program requires collateral for loans over $50,000. Typically, a negative credit score will not bar you from attaining this loan. If you meet the requirements and are willing to put up your own assets for collateral, franchise loans through the MREIDL program are an ideal choice for you.
It is still possible for veterans with poor credit like yourself to secure franchise loans. Start by working to improve your credit score to show lenders that you are a responsible borrower. Use the top tricks to raise credit score fast. Look for franchises that offer financing options and benefits to veterans. Apply for veterans advanced guaranteed loans or patriot express loans through the SBA to get funds regardless of your credit score. Finally, if your business was negatively affected by your deployment, apply for a military reservist economy injury disaster loan to get back on your feet. For veterans with less than satisfactory credit, follow this guide to secure franchise loans.