Why Do Veterans Have a Hard Time Getting Financing?
Getting the funding to start your own business can be difficult for anyone. However, in many cases, it can be even more difficult for veteran entrepreneurs. The following are just a few reasons why a veteran may have a harder time getting started when forming their own company.
1. Little or Bad Credit History
Most people can’t pay for all of the costs of starting a business out of their own pockets. For many, the solution is to get a loan. There are several types of loans that you can apply for depending on your needs, but many of them require a credit check before you are approved. For veterans, this can sometimes be a big obstacle. When you are in the service, you aren’t always concerned about building up your credit. However, having gaps in your credit history can be just as much of a stumbling block as having bad credit when it comes to getting approved for a loan.
2. Lack of Knowledge About Alternative Resources
As mentioned, getting a traditional loan from a bank can be difficult for a veteran, particularly if they don’t have a good or extensive credit history. Of course, there are some financing options that don’t take your credit into consideration or that have more flexible requirements. Some veterans, however, may not know much about getting a loan outside of a big bank. There are programs that help veterans get the financing they need, but not knowing about these options can stop them from getting loans that they may actually qualify for.
3. No Business Background
It can be hard to start a business from scratch and many lenders may not feel comfortable approving a loan when someone has no business background, which is often the case for veterans. Even if you have an excellent credit history and are otherwise a great candidate, this lack of experience can sometimes result in your application being denied. Starting small and working your way up while building a potential customer base can help show lenders that you are able to operate a business successfully.
It can be a frustrating situation for veteran entrepreneurs to finish their service and then have such a difficult time starting the next chapter in their careers. However, there are ways to get funding outside of traditional loans, which are likely to be the most difficult to be approved for. Looking for programs specifically designed to assist veterans in building their businesses is a good place to start.