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Note: USAA no longer offers small business loans or other business financing options. You can see our top choices for small business loans here.
Established in 1922 by a group of Army officers, the United States Automobile Association (USAA) serves the financial needs of active and retired military members and their families. Headquartered in San Antonio, TX, the USAA has over 12.4 million members and provides numerous resources and products, including those that meet the insurance, financial planning, investment, and banking needs of the military community.
Despite the expansive product portfolio, historically, one thing the USAA didn’t partake in was small business finance. That all changed in October 2018 when the Fortune 500 company partnered with StreetShares, another veteran-owned and operated company that works to fund small businesses through affordable loans. Though loan product availability is not exclusive to the military community, StreetShares claims that veteran business owners “get the red carpet treatment,” making for a natural and hopefully successful partnership.
>> Read More: Small business loans for veterans
Entrepreneurial-minded USAA members who need to take out a business loan may want to consider StreetShares, which has become a top contender in the online alternative lender space. The application process is quick, easy, and can be completed online or over the phone.
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- Fill out one simple application and browse offers from multiple lenders
- Receive funding in as little as 24 hours after approval
- Line of credit, equipment financing, term loan, commercial mortgage, credit card, startup loan options available
Getting Small Business Financing Through USAA
The USAA and StreetShares partnership was specifically designed around two StreetShares products: the Patriot Express® Line of Credit and TermLoan. USAA members approved for either of these products will receive an origination fee reduction, which constitutes the major promotion associated with this new partnership.
The application process, which typically takes place online, can be completed in minutes and usually includes immediate notification of pre-approval. The pre-approval process includes a soft inquiry, and therefore, there is no impact on your credit score.
If you choose to proceed with the process, loan approval typically takes between one and four days. If approved, funds for both the Term Loan and the Patriot Express Line of Credit are available in as few as one to two business days.
To be eligible for a USAA small business loan or line of credit, you must be an incorporated business or sole proprietorship that has been in business for at least one year. Further, you must have a U.S. business account and be able to show minimum annual earnings of at least $25,000.
Finally, all loans require a business guarantor with a reasonable personal credit score, which typically is considered to be 600 or higher.
Additionally, to apply, you’ll need to be able to provide your EIN, six months of banking activity, and your most recent business and personal tax returns, though additional financial statements may be required.
Basic Information: Rates, Terms, Fees, and Limits
Despite being two different products, both the Patriot Express Line of Credit and the Term Loan can provide eligible borrowers access to $5,000 to $250,000 with repayment terms between three to 36 months. Most borrowers are limited to 20% of their annual revenue.
Rates for the term loan and line of credit typically fall between 7% and 14%, though they are dependent on a variety of factors, including the applicant’s personal credit score, and therefore rates can be higher for some borrowers.
Further, while there are no “up-front” fees associated with a USAA small business loan or line of credit, StreetShares does apply an origination fee, which is added to the loan principal. While StreetShares typically charges a 3.95% to 4.95% origination fee, USAA members can expect to pay 1.9%, a significant fee reduction. It should be noted that this is a pilot program, and it is possible that this promotional fee reduction will change in the future, though there is no immediate indication of when or if that will happen.
StreetShares is known for having transparent and easy to understand rates, fee structures, and loan requirements. And since USAA members can obtain a greatly reduced origination fee, this loan, when fees are factored in, may be more affordable than others.
Additionally, because the origination fee is added onto the loan principal, this loan is accessible to borrowers who don’t have the necessary fees up front; this is not always the case for other lenders who charge origination fees.
Additionally, StreetShares also offers a “Best Price Guarantee” that states they will beat or match competitive lenders or they’ll send you a $100 Amazon gift card. However, it’s worth noting that this guarantee is only applicable for other online lenders and is not valid for loans and lines of credit that are provided by a bank, thrift, credit union, or CDFI. Additionally, the lender cannot be a provider of merchant cash advances.
Both the USAA and StreetShares provide numerous financial and investment resources to members and users alike. And, in an additional attempt by StreetShares to showcase their competitive rates, they’ve created the “Grover Box,” which is a small business loan comparison tool available as a downloadable Excel template. By using this tool, you can compare several loan options and base your final decision on the overall price of the loan, including interest rates, fees, etc.
>> Read More: Compare the best small business loans
Overall, borrowers seem to be happy with their StreetShares experiences, earning lender positive and strong reviews on many consumer review sites, including Trustpilot; however, one downside is the lending limit.
By limiting loan amounts to 20% of the business’ annual revenue, some borrowers, particularly those who are just getting started or have experienced significant revenue or cash flow issues, will find that a loan through StreetShares doesn’t meet their financial needs.
Additionally, this loan is largely out of reach for borrowers with credit scores under 600, and borrowers who just meet the loan requirements can likely expect to receive an interest rate well above the quoted average of 7% to 14%.
If you need cash fast or haven’t had luck getting a loan from a credit union or bank, then StreetShares is a competitive option and one that has received solid reviews from existing and past customers. However, if you have good or excellent credit and can wait a few days for your funds, then you may want to consider more traditional lending products in addition to those offered by online lenders like StreetShares.
Author: Jennifer Lobb