New Bill Waives SBA Loan Fees and Cuts Down Payments by 5% for Veteran-Owned Businesses Up to $1 Million

If you’re a veteran or a military spouse looking to start or expand a small business, this proposed legislation, the Veteran Entrepreneurship Empowerment Act, is a major financial game-changer. It’s essentially a bill designed to fix the biggest headache veteran entrepreneurs face: getting the initial cash.

This bill goes straight for the wallet, targeting the high fees and personal investment requirements that often block veterans from securing Small Business Administration (SBA) loans. Specifically, it eliminates several key guarantee fees for SBA loans up to $1 million and mandates a reduction in the personal cash needed upfront to get the loan approved. It’s a clear attempt to level the financial playing field, recognizing that veterans often struggle to build up the necessary credit and startup funds due to frequent moves and the transition from active duty.

Cutting the Cost of Capital

When a small business gets an SBA loan, the lender usually has to pay the SBA a guarantee fee—a cost that often gets passed directly to the borrower. This bill says: not anymore, at least for veterans. For both the common 7(a) loans and the Small Business Investment Act loans, the legislation waives all guarantee fees (both upfront and ongoing) for loans up to $1 million if the business is owned by a veteran or a veteran’s spouse.

Think of it this way: Every dollar saved on administrative fees is a dollar that can be spent on inventory, payroll, or rent. For a veteran trying to launch a new contracting firm or a spouse opening a coffee shop, this fee waiver significantly lowers the total cost of borrowing, making that $1 million loan suddenly much more affordable. The bill also broadens the definition of who qualifies, including members of the Reserve components and individuals eligible for the Transition Assistance Program (TAP), ensuring more military-affiliated families can access this benefit.

The Equity Injection Problem Solved

Beyond fees, the biggest hurdle for many small business owners is the “equity injection”—the personal cash you have to put into the business before the bank will give you the rest. It’s the down payment on your dream. Current SBA guidance often requires a significant percentage of the total project cost to come from the borrower’s pocket.

This Act mandates that for loans up to $1 million made to veterans or their spouses, this minimum equity injection requirement must be reduced by at least 5 percentage points. If the standard requirement is 15%, the veteran-owned business would only need to put up 10%. This is huge. For a $500,000 project, that 5% reduction saves the veteran $25,000 in required personal startup cash. This provision directly addresses the finding that veteran entrepreneurs often lack the personal funds necessary to get their businesses off the ground. The bill also tells the SBA Administrator to encourage lenders to reduce these requirements even further, which is a nice push toward flexibility.

What About Everyone Else?

The main impact here is a clear preference for veteran-owned businesses in the SBA lending space. Non-veteran small business owners will still have to pay the guarantee fees and meet the higher equity injection requirements. While this bill is narrowly focused on supporting the veteran community, it does create a noticeable financial advantage for military-affiliated entrepreneurs over their civilian counterparts when competing for the same loan pool.

Finally, the bill throws a spotlight on transparency. It requires the SBA to collect and publicly publish data on the participation of veterans and military spouses in its major loan programs. This means we’ll get a much clearer picture of how successful these programs are and where the gaps still exist, ensuring that the SBA is held accountable for actually reaching the people this legislation is designed to help.