Navy Federal Small Business Loan: 2021 Review


A Navy Federal business loan can help established businesses owned by veterans or others with military ties address a range of business needs from commercial equipment to short-term cash flow issues. Since Navy Federal is a credit union, Navy Federal Credit Union business loans may provide lower rates and offer supplemental member benefits.


Overview: Amounts, rates and fees

Navy Federal offers term loans, equipment financing and lines of credit for small businesses.

Navy Federal business loans: At a glance

AmountStarting rateFeesMinimum credit score
Term loansUp to $50,000 to apply with the business loan application. Amounts above $50,000 go through a business lending representative.Up to 60 monthsNot disclosed$150 origination fee; lien search and recording fees may apply depending on state<Not disclosed
Business vehicle loansUp to $50,000 to apply with the business loan application. Amounts above $50,000 go through a business lending representative.Up to 60 monthsNot disclosedNo feesNot disclosed
Commercial vehicle loansUp to $50,000 to apply with the business loan application. Amounts above $50,000 go through a business lending representative.Up to 60 monthsNot disclosedNo feesNot disclosed
Commercial real estate loansUp to $50,000 to apply with the business loan application. Amounts above $50,000 go through a business lending representative.60 months term, 20 -year amortizationNot disclosed: Fixed and variable ratesFees can include:
  • Appraisal fee
  • Environmental study fee
  • Attorney fees
  • Title search
  • Pest inspection
  • Origination fee
  • Documentation preparation
  • Other applicable fees
Not disclosed
Business lines of creditFrom $35,000FlexibleVariable rate tied to the Wall Street Journal prime rate
  • $325 for equity up to $100,000
  • 0.50% origination fee on limits over $100,000
  • Applicable lien search and recording fees
Not disclosed
Checking lines of credit$500, $1,000 or $5,000Not specifiedFixed APR of 17.90%$50 annual fee, assessed with the first statementNot disclosed

Term loans

Navy Federal’s business term loans are available for purchases and refinancing and can be used for computer or commercial equipment, expansion and leasehold improvements. The small business term loan may cover up to 75% of the purchase, depending on the type of equipment, which means that you may have to put down more than 25% of the purchase price. You may also need to pay lien search and recording fees on top of a $150 origination fee.

Term loans:

  • Minimum and maximum amount:
    • Up to $50,000 to apply with the business loan application
    • Amounts above $50,000 go through a business lending representative
  • Repayment term: Up to 60 months
  • Repayment schedule: Monthly
  • Interest rates: Not disclosed
  • Fees: $150 origination fee; lien search and recording fees may apply depending on state
  • Typical time to funding after approval: Within several business days or less

Business vehicle loans

If you want to purchase a car, light-duty truck or SUV for your business, then the Navy Federal business vehicle loans might be a good option. A business vehicle loan can help you cover up to 100% of a new vehicle’s value or purchase price and 90% of a used vehicle’s value or purchase price, which means that a down payment of at least 10% will be required for a used business vehicle.

Business vehicle loans:

  • Minimum and maximum amount: 
    • Up to $50,000 to apply with the business loan application
    • Amounts above $50,000 go through a business lending representative
  • Repayment term: Up to 60 months
  • Repayment schedule: Monthly
  • Interest rates: Not disclosed
  • Fees: No fees
  • Typical time to funding after approval: Within several business days

Commercial vehicle loans

When you need to finance a commercial, heavy-duty truck, van or tractor-trailer, you may want to consider a Navy Federal commercial vehicle loan. The commercial vehicle loan can help you finance up to 80% of the value or purchase price of a new commercial vehicle and 75% of the value or purchase price of a used one.

Commercial vehicle loans:

  • Minimum and maximum amount:
    • Up to $50,000 to apply with the business loan application
    • Amounts above $50,000 go through a business lending representative
  • Repayment term: Up to 60 months
  • Repayment schedule: Monthly
  • Interest rates: Not disclosed
  • Fees: No fees
  • Typical time to funding after approval: Within several business days

Commercial real estate loans

Navy Federal’s commercial real estate loans can help you with the purchase, refinance or renovation of commercial real estate and investment properties. Depending on the purpose of the loan, a 20%-35% down payment may be required. There are also various fees that may apply, such as appraisal fees and origination fees.

As is common among commercial real estate loans, Navy Federal’s loan term and amortization period — which is the period of time over which the interest and principal are calculated — are different. This means that monthly payments may be lower, but at the end of the five-year term, the borrower will need to refinance or make a balloon payment to pay off the remaining balance. Navy Federal also has both fixed and variable interest rate options.

Commercial real estate loans:

  • Minimum and maximum amount: 
    • Up to $50,000 to apply with the business loan application
    • Amounts above $50,000 go through a business lending representative
  • Repayment term: 60 months term, 20-year amortization
  • Repayment schedule: Monthly
  • Interest rates: Fixed and variable rates available
  • Fees included: 
    • Appraisal fee
    • Environmental study fee
    • Attorney fees
    • Title search
    • Pest inspection
    • Origination fee
    • Documentation preparation
    • Other applicable fees
  • Typical time to funding after approval: 30-45 days

Business lines of credit

If you are looking for more flexible financing than term loans for unexpected business expenses, such as cash flow gaps, then you may want to consider the Navy Federal Business Line of Credit. With a line of credit, you only repay the amount you use instead of the entire limit, similar to a business credit card. However, the line of credit cannot be used for real estate purchases. Collateral is required, and interest rates are variable.

Business lines of credit:

  • Minimum and maximum amount: Starting at $35,000
  • Repayment term: Depends on borrower needs
  • Repayment schedule: Monthly
  • Interest rates: Variable rate tied to the Wall Street Journal prime rate
  • Fees:
    • $325 for equity up to $100,000
    • 0.50% origination fee on limits over $100,000
    • Applicable lien search and recording fees
  • Typical time to funding after approval: Not disclosed

Checking lines of credit

The Navy Federal Checking Line of Credit can help protect your business checking account from overdraft fees. Designed to offset short-term cash needs, the checking line of credit has assigned limits from $500 to $5,000 and a fixed APR of 17.90%. It carries an annual fee of $50, which may be as high as 10% of your assigned limit.

Checking lines of credit:

  • Minimum and maximum amount: $500, $1,000 or $5,000
  • Repayment term: The greater of 2% of the outstanding balance or $20
  • Repayment schedule: Monthly
  • Interest rates: Fixed 17.90% APR
  • Fees: $50 annual fee
  • Typical time to funding after approval: Not disclosed

How to qualify

Here is the rundown of business loan requirements to qualify:

  • Time in business: At least two years
  • Collateral requirements: Varies, depending on loan type. Examples of collateral include accounts receivable, a general lien or real estate. In addition, you may also need to sign a personal guarantee.
  • Minimum annual revenue: Not disclosed
  • Industry restrictions: The following types of businesses are not permitted:
    • Money services business (MSB)
    • Internet gambling
    • Marijuana-related services
    • Multilevel marketing services
    • Adult content services
    • Auto dealers
  • Initial deposit: Once you become a member of Navy Federal, you’ll need to make a deposit of either $100 or $105 before applying for a business loan.
  • Minimum credit score: Not specified

Navy Federal may consider a startup business with excellent credit and strong personal cash flow for unsecured term loans up to $25,000.

Required documents

To apply for a term loan, a commercial or business vehicle loan, a commercial real estate loan or a line of credit, you would need the following documents:

  • Completed business loan application for amounts up to $50,000
  • Two most recent business tax returns under existing ownership
  • Personal tax returns for all owners/guarantors (most recent two years)
  • Personal financial statement for all owners/guarantors
  • Documentation pertaining to the purchase for which the loan is being used
  • Additional documentation may be required, based on your business structure

Navy Federal membership requirements

Before you can open a Navy Federal business account, you must first become a member of Navy Federal Credit Union. Membership to Navy Federal Credit Union is open to the following individuals:

  • Active-duty or retired members and veterans in all branches of the U.S. military: Army, Marine Corps, Navy, Air Force, Space Force, Coast Guard and National Guard
  • Immediate family members of active-duty military and veterans
  • Department of Defense civilian employees

How to become a Navy Federal business account holder: In addition to becoming a Navy Federal Credit Union member, you need to become a business member to open a Navy Federal business account. The Navy Federal business membership requirements include the following:

  • All business owners are individual members of Navy Federal Credit Union with accounts in good standing
  • Complete a business membership preapplication form
  • Make a deposit of $250 if you are a sole proprietor or $255 if your business is a separate legal structure, like an LLC
  • Provide documentation appropriate for your business structure
  • Call Navy Federal two business days after completing the business membership preapplication form to review and submit the necessary documents

Pros and cons

ProsCons
No prepayment penaltiesMost loan options require a down payment and/or collateral
No fees for business and commercial vehicle loansBusiness membership process is very lengthy, costs at least $250 and is limited to individuals tied to the military
The business checking line of credit provides overdraft protection for your business checking accountRequires at least two years in operation to apply


Review: Should you apply?

If you are already a member of Navy Federal Credit Union, are a veteran small business owner or have military ties, then Navy Federal may be a good option for your business needs. Navy Federal’s business vehicle loans are attractive for having no fees and not requiring a down payment in some cases. However, the two-year time-in-business requirement may be a barrier for startups.


Alternatives to Navy Federal

Here’s how some lenders stack up with Navy Federal when it comes to business loans:

Navy Federal vs. Bank of America

Like Navy Federal, Bank of America offers a wide array of business loans and lines of credit. However, Bank of America doesn’t require membership. It offers unsecured business lines of credit starting at $10,000 with interest rates starting at 4.50%, while Navy Federal’s rates are tied to the prime rate or a 17.90% fixed APR for business checking lines of credit. On the flip side, Bank of America requires annual revenue of $100,000 to qualify.

Navy Federal vs. Funding Circle

If you are looking into online lenders with quick funding, Funding Circle has both term loans and business lines of credit. Unlike Navy Federal’s term loans, Funding Circle’s term loans do not require a down payment; you can borrow $25,000 to $500,000 with terms of up to 60 months. With Funding Circle, you also have more flexibility in the purpose of the term loan. However, you may incur a prepayment penalty if your term loan is funded by a Funding Circle partner.

Navy Federal vs. OnDeck

OnDeck offers short-term loans of up to $250,000, which is significantly higher than Navy Federal’s maximum of $50,000 through its business loan application. For amounts over $50,000, Navy Federal requires an appointment with a lender representative. OnDeck’s timeline to funding is also much quicker, offering same-day funding for term loans up to $100,000, while Navy Federal takes several business days. However, interest rates differ sharply between the two: For example, OnDeck’s business line of credit has an interest rate that starts at 35.90%, whereas Navy Federal offers a fixed 17.90% APR on its business checking line of credit.