USAA stands for United Services Automobile Association and it is a San Antonio-based Fortune 500 diversified financial services group of companies. USAA mainly provides insurance, investing, and banking solutions to millions of military members and their families. They offer very comparative rates on insurance, banking, and investment services including small business loans, personal loans, etc. So, if you are a veteran who has honorably served the country or if you are a family member of the U.S. military person then you can get USAA loans for business.
USAA is a mutual insurance company and its main requirement to become eligible for insurance, investing or another financial service is either you have to be a U.S. military person or you have to be a family member of the U.S. military. If you fulfill this requirement then you can apply for their financial service like various insurances, loans, etc. Moreover, you must have an excellent or good credit score to qualify for USAA loans.
What Is The USAA?
The USAA started its journey nearly a century ago. It was established in 1922 by 25 army officers to ensure their automobiles and the rest are history. Since its establishment, USAA has come a long way. Now it has become a Fortune 500 company. From the start, USAA has been serving the U.S. military, its veterans, their spouses, and their children by providing services like insuring their assets, banking, investing, and retiring. USAA also offers other financial services like investments, financial planning, and life insurance.
Requirements To Apply For USAA Loan
You have to be a member of USAA if you want to get a loan from USAA. This is what USAA says it serves:
1. People serving in the U.S. Air Force, Army, Coast Guard, Marines, Navy, National Guard, and Reserves
2. Former military members who have retired or honorably discharged
3. Widows, widowers, and former spouses of USAA members who have joined USAA prior to or during the marriage
4. Children of USAA members
5. Cadets and midshipmen at U.S. service academies
6. officer candidates within 24 months of commissioning
How To Get A USAA Loan
If you are a USAA member then you can fill out an application on USAA’s website and submit it. If you are applying for a personal loan then pre-qualification is not available from USAA. Moreover, USAA doesn’t publicly disclose many of its borrower requirements. But, according to many professionals, if you want to qualify for USAA personal loan then you must have a credit score of at least 690. The more your credit score is the less your interest rate will be. For example, if you apply for a two-year, $10,000 loan then a 15.5% APR would cost you $487/month as payment. So, you would pay $1,688 in total interest on that loan.
Do USAA Business Loans Exist?
USAA business loan doesn’t exist anymore. From the start, USAA is offering a myriad of financial services to its members and in October 2018, they launched a small business loan pilot program by partnering with StreetShares. StreetShares is a veteran-owned, operated, and funded loan provider. Under this pilot program, USAA members were able to access lower rates on two of StreetShares’ products. But unfortunately, USAA doesn’t continue the pilot program so there aren’t any small business loans available from the USAA. You can only apply for USAA personal loans. So, this is very frustrating for veteran small business owners.
USAA Small Business Loans Alternatives
So, small business loans are not available in USAA. So, what are the alternatives of USAA small business loans? Well, there are a few alternatives available. They are –
1. Merchant Cash Advances
2. Short-Term Loans
3. Invoice Financing
4. Business Lines of Credit
5. Term Loans
6. SBA Loans
1. Merchant Cash Advances
This is the best alternative to USAA small business loans. A merchant cash advance is not technically a loan but an advance. It means a lender will buy your business’s future products rather than lending your business money. Here, the lender will receive the money rapidly via a daily percentage of your business’s credit card revenues. The only disadvantage of Merchant Cash Advances is, it is more costly than conventional small business loans.
Terms Of Merchant Cash Advances
1. Loan amounts ranging from $2,500 to $250,000
2. Factor rates ranging from 1.14-1.18
Requirements Of Merchant Cash Advances
1. At least 1 year in business
2. A personal credit score of 500+
3. At least $50,000 in annual revenue
Documents Required
1. Driver’s License
2. Voided Business Check
4. Credit Score
5. Business Tax Returns
6. Credit Card Processing Statements
2. Short-Term Loans
This type of loan is like a condensed version of traditional term loans that you would get from a bank. The interest rate of this type of loan is moderate compared to Merchant Cash Advances. Here, you have to pay the loan amount in a short time. So, you have to make more frequent payments, and this type of loan caries factor rates instead of APRs.
Terms Of Merchant Cash Advances
1. Loan amounts from $2,500 to $250,000
2. Repayment terms as short as 3 months or as long as 18 months
3. Interest rates starting at 10%
Requirements Of Merchant Cash Advances
1. At least 1 year in business
2. A personal credit score of 550+
3. At least $50,000 in annual revenue
Documents Required
1. Driver’s License
2. Voided Business Check
3. Proof of Ownership
4. Bank Statements
5. Credit Score
6. Personal Tax Returns
List Of Lenders
1. CAN Capital
2. OnDeck Capital
3. FowardLine
4. The Business Backer
5. StreetShares
6. Foundation
7. Direct Capital
8. QuarterSpot
3. Invoice Financing
This is another great alternative to USAA small business loans. It offers small business owners 90% of their awaiting outstanding invoices as advance. Moreover, invoice financing works as a form of collateral for small business owners. It also offers pretty stellar terms to business owners which is very convenient for small business owners.
Terms Of Invoice Financing
1. Loan amounts of about 50% to 90% of your total invoice amount
2. Factor rates of 3% plus a percent for each week your invoice is outstanding
Requirements Of Invoice Financing
1. At least 6 months in business
2. At least $50,000 in annual revenue
Documents Required
1. Driver’s License
2. Voided Business Check
3. Bank Statements
4. Credit Score
5. Outstanding Invoices
List Of Lenders
1. Fundbox
2. BlueVine
4. Business Lines of Credit
Business Lines of Credit is another potential alternative to a USAA business loan. This type of credit is quite similar to a business credit card and it will provide your business with a line of credit that you will be able to use anytime you want.
Terms Of Business Lines of Credit
1. Credit limits of $10,000 to over $1 million
2. Loan repayment terms from 6 months to 5 years
3. Rates as low as 7% or as high as 25%
Requirements Of Business Lines Of Credit
1. At least 6 months in business
2. At least $50,000 in annual revenue
Documents Required
1. Driver’s License
2. Voided Business Check
3. Bank Statements
4. Balance Sheet
5. Profit & Loss Statements
6. Credit Score
7. Business Tax Returns
8. Personal Tax Returns
List Of Lenders
1. Dealstruck
2. Foundation
3. Credit Junction
4. Kabbage
5. BlueVine
6. InterNex Capital
7. Headway Capital
5. Term Loans
The traditional term loan is another excellent alternative to USAA small business loans. This type of loan is very common in businesses. Here, the lender will decide the repayment schedule and you have to pay a large amount of money with interest. The main difference between a short-term loan and a term loan is; a term loan carries a repayment term that will be more than a year. Therefore, term loans have less frequent, more affordable monthly payments compared to short-term loans.
Terms Of Term Loan
1. Loan amounts ranging from $25,000 to $500,000
2. Loan terms from 1 to 5 years
3. Interest rates as low as 7% and as high as 30%
Requirements Of Business Lines Of Credit
1. At least 1 year in business
2. A personal credit score of 600+
3. At least $90,000 in annual revenue
Documents Required
1. Driver’s License
2. Voided Business Check
3. Bank Statements
4. Balance Sheet
5. Profit & Loss Statements
6. Credit Score
7. Business Tax Returns
8. Personal Tax Returns
List Of Lenders
1. Funding Circle
2. Lending Club
3. Foundation
4. OnDeck Capital
5. CAN Capital
6. SBA Loans
SBA loan also offers various ideal terms for small businesses. There are some specific programs available for veterans including VA SBA loans. An SBA loan is a small business term loan and this loan is backed by a government entity named Small Business Administration (SBA). SBA also has a 7(a)-loan program that provides a guarantee of up to 85% of a small business loan which is excellent for small businesses. The only disadvantage of an SBA loan is it involves a lengthy application process for the loan.
Terms Of SBA Loans
1. Loan amounts of $5,000 to $5 million
2. Loan terms range from 5 years to 25 years, with 10-year terms being standard
3. Interest rates starting at 6.5%
Requirements Of SBA Loans
1. At least 2 years in business
2. A personal credit score of 620+
3. At least $100,000 in annual revenue
Documents Required
1. Driver’s License
2. Voided Business Check
3. Bank Statements
4. Balance Sheet
5. Profit & Loss Statements
6. Business Tax Returns
7. Personal Tax Returns
8. Business Plan
9. Business Debt Schedule
List Of Lenders
1. SmartBiz
2. Celtic Bank
Final Thoughts
So, you might become disappointed to know that USAA small business loans are no longer available, but I hope the above alternatives will provide you more options and facilities than USAA small business loans. Apart from these alternatives, there are other lenders available who are also willing to become your business’s go-to source of funding. Therefore, compare available options and pick the right loan for your small business.
References: 1 https://www.fundera.com/business-loans/guides/usaa-small-business-loan
References: 2 https://www.usaa.com/inet/wc/advice-finances-6-financial-considerations-for-the-small-business-owner
Last Updated on August 6, 2022 by Ana S. Sutterfield
Magalie D. is a Diploma holder in Public Administration & Management from McGill University of Canada. She shares management tips here in MGTBlog when she has nothing to do and gets some free time after working in a multinational company at Toronto.
