Small Business Resources for Veterans

Are you a veteran or current military service member who is thinking about entrepreneurship? If so, you are not alone. Figures from the Small Business Administration reveal that more than one-fifth (22 percent) of veterans have either started their own business or are considering starting one.

Although approximately 1.6 million U.S. veterans are already self-employed, according to data from the SBA, the government is keen to help even more begin on the path to entrepreneurship through a number of tailored programs and initiatives. Many of these are run through the SBA.

"More than 14 percent of businesses in America are owned by veterans, and SBA is proud that we guarantee more than $1 billion annually in loans for veteran-owned businesses," says SBA administrator Steven Preston. "Veteran-owned businesses make significant contributions to the economy and because of the unique technical and leadership skills they acquire through military service, they can become successful entrepreneurs."

Veterans' special skills

Are veterans particularly suited to entrepreneurship? Many would say yes. The U.S. Department of Labor lists 10 reasons that vets make excellent employees—and many of these could just as easily describe why they would also make outstanding small business owners.

First of all, veterans have the proven ability to learn new skills and apply them in real-world situations. This could come in handy when learning the ins and outs of small business software, creating an annual budget or conducting market research. Second, they have been trained to lead, as well as to work as part of a team. Veterans also tend to excel at performing under pressure, prioritizing and overcoming adversity.

"Veterans are self-starters who possess an excellent work ethic. They are leaders who know how to manage others," said Secretary of Veterans Affairs Anthony J. Principi, who instigated the Veterans Transition Franchise Initiative.

Where to start?

Office of Veterans Business Development. The SBA created the Office of Veterans Business Development to coordinate all of its programs for veterans, service-disabled veterans, reserve component members and their dependents or survivors.

National Veterans Business Development Corporation. The National Veterans Business Development Corporation (which does business under the name of The Veterans Corporation) is a 501(c)(3) organization that was formed as a result of the Veterans Entrepreneurship and Small Business Development Act of 1999, which recognized that the U.S. "has done too little to assist veterans ... in playing a greater role in the economy."

The corporation is tasked with creating and enhancing entrepreneurial opportunities for veterans and service-disabled veterans. It aims to provide these groups with tools and resources needed to start business, including access to capital, bonding, and entrepreneurial education.

Patriot Express Loan Initiative. The Patriot Express Loan Initiative was launched in 2007 by the SBA for veterans and members of the military community (including reservists, National Guard members, and spouses or widowed spouses of military service members) who want to establish or expand their small business.

The loan is offered by the SBA's participating lenders across the U.S. and can provide very quick turnaround time for approvals. Loans are available for up to $500,000 and qualify for a guaranty of up to 85 percent (for loans worth $150,000 or less) or 75 percent (loans worth $150,001 to $500,000). Loans above $300,000 require collateral.

According to the SBA, its Patriot Express loans also have the lowest rates available through the administration, typically ranging from 2.25 percent to 4.75 percent over prime—dependent on size and maturity.

Remember that these loans are not provided by the government, but through various banks and lenders. That means you'll have to have a good credit score and a solid business plan to qualify, just as with any other business loan. You can use your small business software to create a business plan to show to potential lenders.

Military Reserve Economic Injury Disaster Loans. For those who already own small businesses and expect to be called to active duty, the SBA has established Military Reserve Economic Injury Disaster Loans (MREIDL). Through this initiative, organizations can receive loans worth up to $1.5 million if they are in danger of economic injury because an owner or essential employee has been called up as a military reservist.

Veterans Transition Franchise Initiative. The Veterans Transition Franchise Initiative (VetFran), a voluntary program run through the International Franchise Association, is open to all veterans of the U.S. Armed Forces who were honorably discharged. Through the program, participants receive financial incentives—such as discounted fees when opening a franchise—that are not available to other franchise investors.