SBA Patriot Express Loans: Small Business Loans to Veterans Hit Milestone

Two years ago the SBA began its Patriot Express Pilot Loan Program. The goal was to assist military veterans and their spouses start or expand small businesses. The program recently surpassed the milestone of $300 million in money lent. Here are some basics about how the Patriot Express loan program works.

According to an SBA press release, in less than 2 years, more than $315 million in Patriot Express loans has been lent to more than 3,750 veterans and their spouses.

First of all, who is eligible? Patriot Express loans are available to:

• Veterans;
• Active-duty service members eligible for the military's Transition Assistance Program;
• Reservists and National Guard members;
• Current spouses of any of the above; and
• The widowed spouse of a service member or veteran who died during service or of a service-connected disability.

Secondly, what can the loans be used for? Importantly, they are not confined to existing businesses. The loans can be used to start up a small business. According to the SBA, they can also go toward most business purposes, such as business expansion, working capital, or the purchasee of equipment, inventory, or business occupied real estate.

The loan amount can go as high as $500,000. According to the SBA, the average loan amount is $85,000. Loans above $350,000 require the borrower to put up all available collateral.

Interest on the loans matches the interest on SBA 7(a) loans -- prime plus 2.25% if the loan matures in less than 7 years, or prime plus 2.75% if it mature in 7 or more years. Interest rates can be slightly higher if the loan amount is under $50,000.

Like all SBA loans, Patriot Express loans are made through participating private lenders. According to the SBA, April and May were record months for the program. The American Recovery and Assistance Act (ARRA) likely contributed by boosting the SBA backing for these loans to 90%.

The SBA also touts these loans, a streamlined version of its Express Loan program with better terms, the quickest loans for the SBA to turn around. Once the SBA gets an application from a lender, it purportedly turns it around within 24 hours.

• SBA Patriot Express Pilot Loan Initiative
• SBA Office of Veterans Business Development
• VetBiz.gov (Department of Veteran Affairs)
• National Veteran Owned Business Association
• Starting Up: Entity Selection and Operating Agreements (provided by The Law Offices of Lawrence Brown)