Navy Federal Business Loans: 2023 Review
Marianne Hayes is a freelance writer whos been covering personal finance for nearly a decade. She writes about everything from budgeting and debt repayment to mortgages and student loans (and pretty much everything in between). Marianne has written for CNBC, Forbes, Cosmopolitan, Redbook and more.
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Kurt Adams is a Senior Editor at LendingTree, where he manages our network of freelance contributors. He also oversees small business content and frequently edits mortgage and credit cards content.
Before joining LendingTree, Kurt spent a past life as an academic, studying U.S. history. He now brings that near-decade of teaching, writing and editing to help people better understand personal finance.
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Janet Schaaf is a freelance writer, editor and proofreader who considers reader advocacy to be her calling. After taking a few roads less traveled, Janet completed a bachelor’s degree in English Literature from the University of Missouri-Kansas City, with English Department Honors. She has been correcting grammar and checking facts since she could string a sentence together. For the past three years, Janet has focused on making personal finance topics understandable and relatable. Loan terms and credit card agreements can look overwhelming, but understanding what you’re agreeing to is paramount in grasping the impact debt can have on your life.
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Pros and cons of Navy Federal
| Pros | Cons |
|---|---|
No fees for business and commercial vehicle loans No prepayment penalties on equipment loans and commercial real estate loans Provides financing options and resources for business owners tied to the armed forces | Must be a Navy Federal member in good standing who joins its business membership program. This costs a minimum of $250. Unclear APR structure Requires a personal guarantee |
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Navy Federal small business loans review
Navy Federal Credit Union provides small business financing to veterans, active service members, and other business owners with ties to the armed forces. Customers can use any of the 350 branches worldwide, as well as mobile and online banking options. The three main types of small business funding Navy Federal Credit Union offers are equipment loans, business lines of credit, and commercial real estate loans. It can take up to five business days for Navy Federal to make a lending decision.
Who is Navy Federal for?
- Small business owners with ties to the armed forces. That includes veterans, active and retired members of the Army, Marine Corps, Navy, Air Force, Coast Guard, National Guard and Space Force. Certain Department of Defense employees and immediate family members are also eligible.
- Business owners who need essential equipment or help covering cash flow gaps.
- Those looking for additional business resources. A Navy Federal business loan unlocks a network of small business professionals, personalized insurance options and more.
Navy Federal small business financing at a glance
| Product | Loan amounts | Repayment term | Estimated APR range | Fees |
|---|---|---|---|---|
| Checking lines of credit | $500, $1,000 or $5,000 | Not disclosed | 17.90% APR | $50 annual fee |
| Secured business line of credit | Starting at $35,000 | Not disclosed, but Navy Federal says they’re flexible and can match borrower needs | Variable rate that depends on applicant’s creditworthiness and the Wall Street Journal prime rate. | $325 for equity up to $100,000; 0.5% origination fee for limits greater than $100,000. Lien search and recording fees may also apply. |
| Equipment loans | $50,000+ | Not disclosed | Not disclosed | Business and commercial vehicle loans: no fees Term loans for equipment: $150 origination fee. Lien search and recording fees may also apply and vary by state. |
| Commercial real estate loans | Not disclosed | 60 months | Not disclosed, but fixed and variable rates are available | May include appraisal, environmental study, origination fee, document preparation, title, pest inspection, attorney fees and more. |
Line of credit
A business line of credit operates differently than a loan. It’s a revolving credit line that business owners can access on an as-needed business. These funds can be used to cover all kinds of business expenses, and interest only applies to the outstanding balance. Navy Federal offers two different types of credit lines.
- Secured business line of credit: Credit lines start at $35,000. They require proof of collateral, a personal guarantee, and a personal credit check. Interest rates are variable and tied to the Wall Street Journal prime rate.
- Checking line of credit: Protects your business checking account from overdraft charges. Fees apply and the fixed APR is 17.90%. A personal guarantee and personal credit check are required.
Equipment financing
Equipment financing allows you to buy essential equipment for your business, spreading out the cost over time. Eligible purposes for equipment loans include everything from commercial-grade machinery to office furniture to vehicles. Repayment terms are usually fixed and a down payment may be required. Navy Federal may finance between 75% to 100% of the cost of the equipment, depending on the specific loan type. Navy Federal offers three equipment financing options:
- Term loans: Navy Federal’s term loan options are best for commercial equipment, computer equipment, leasehold improvements, and expansion. They’re available for purchases and refinancing. Navy Federal finances up to 75% of the cost.
- Business vehicle loans: Ideal for cars, SUVs and light-duty trucks. There are no fees or prepayment penalties, and Navy Federal will finance up to 100% of a new vehicle and up to 90% of a used vehicle.
- Commercial vehicle loans: Designed for commercial-grade vans and trucks, as well as trailers. Navy Federal will finance up to 80% of a new vehicle and 75% of a used vehicle.
Commercial real estate loans
A commercial real estate loan is also known as a business mortgage loan. It can be used to buy an existing location for your business, or to buy land for you to build one. You can expect a more rigorous application process when compared to a residential mortgage. Most banks require a 20% to 30% down payment, with the property serving as collateral. Navy Federal’s commercial real estate loans come with fixed or variable interest rates. Certain fees apply.
Navy Federal borrower requirements
| Minimum annual revenue | Not disclosed |
| Minimum time in business | Not disclosed |
| Minimum credit score | Not disclosed |
Eligibility requirements to get a Navy Federal business loan vary. Some form of collateral is required for business loans and secured lines of credit. All business financing options require a personal guarantee. Navy Federal does not disclose its requirements around annual revenue, time in business, or minimum credit scores. However, these factors will likely be considered when determining the amount you’re eligible to borrow and rates you’d be offered.
To qualify, you must be a credit union member in good standing and belong to Navy Federal’s business membership program. The latter involves a separate application process and a deposit of $250 for sole proprietorships; $255 for other separate legal entities.
Required documents
Along with your application, Navy Federal requires you to submit additional documents. Specific requirements may vary based on the type of loan you’re looking for and your specific application:
- Purchase invoice/buyers order with relevant serial number or the vehicle’s year, make, model, mileage, VIN and sales price
- If refinancing, the vehicle’s mileage and payoff statements
- Certificate of insurance (Navy Federal listed as loss payee)
- Business tax returns from most recent two to three years
- Possibly a business plan
- Business debt schedule
- Sales contract, if purchasing commercial real estate
- Lease agreements and rent rolls for investment properties
- Renovation estimates for materials and labor, for commercial real estate
- Personal tax returns for all owners/guarantors from last two to three years
- Personal financial statement for all owners/guarantors
- Proof of collateral for secured business loans
- Personal guarantee
Alternatives to Navy Federal
| Navy Federal | Funding Circle | OnDeck | |
|---|---|---|---|
| Minimum credit score | Not disclosed | 660 for term loans, 650 for SBA loans | 625 |
| Loan products offered | Term loans for equipment, business lines of credit, commercial real estate loans | Term loans, business lines of credit, and SBA loans | Term loans and business lines of credit |
| Time to funding | Not disclosed | As little as 2 days for term loans, and 13 days for some SBA loans | Up to 3 business days for term loans |
| Starting APR | Term loans: not disclosed Secured business lines of credit: variable and dependent on Wall Street Journal prime rate |
| Term loans and business lines of credit: starting at 35.40% APR |
| Maximum loan size | Term loans: $50,000+ | Term loans: $500,000, SBA loans: $5,000,000 | Term loans: $250,000 |
| Minimum annual revenue | Not disclosed | Term loans: $50,000, SBA loans: $500,000 | Term loans: $100,000 |
Navy Federal vs. Funding Circle
Navy Federal could be the right fit for veteran-owned businesses and those who have ties to the armed forces, but you can expect to jump through a few hoops — like spending extra time and money applying to Navy Federal’s business membership program. You first must be a member of the credit union. Funding Circle offers quick funding and competitive interest rates. Qualified business owners can also borrow up to $500,000. However, you’ll need a minimum credit score of 660 for a business term loan.
Navy Federal vs. OnDeck
One downside to a Navy Federal business loan is the credit union’s lack of transparency around credit score requirements. The same can be said for its annual revenue and time in business requirements. OnDeck term loans allow for up to $250,000 within just a few business days. With a minimum personal FICO Score of 625, it may be an option for borrowers with poor or checkered credit histories, too. However, interest rates are steep and start at 35.40% APR. This lender also requires a minimum of $100,000 in annual revenue.