Veteran Small Business Loans

Bob TannenhauserSmall Business Lending

Veteran Business Loans

They served valiantly with great skill.  They endured tremendous hardship on our behalf.  Many were injured and suffer permanent disabilities.  Now, veterans are facing the specter of unemployment.

With the war in Afghanistan winding down, budget constraints being imposed on the defense department, and the use of technology increasing, there is a dramatic rise in the number of military personnel voluntarily and involuntarily leaving the armed forces.  The former military men and women face the daunting task of finding jobs in an economy where the unemployment rate of veterans, 7.9%, already exceeds the national average.

There are 2.45 million veteran-owned businesses, employing over 5.8 million people, according to the Small Business Administration (SBA). Clearly, small business ownership is a path to economic success and stability for veterans, as well as employment for them and other Americans.  There are resources from governmental and non-governmental entities available to assist veterans in becoming entrepreneurs, such as the SBA’s Boots to Business Program; Syracuse University’s Institute for Veterans and Military Families and Entrepreneurship Bootcamp for Veterans with Disabilities and the International Franchise Association’s VetFran Program. But there are also obstacles that need to be overcome and steps that can be taken to further assist returning veterans.

For example, prospective entrepreneurs may have the required skills, but lack access to the capital needed to start a business or acquire a franchise.  The SBA has loan programs available, but recently discontinued its Patriot Express program, which was specifically designed for veterans.  It should be reinstated to serve their capital needs, while still satisfying the SBA’s need to safeguard its guarantee (perhaps by requiring a minimum FICO SBSS score similar to that required under the Small Business Loan Advantage program).  Another obstacle specific to veterans is the fact that, even if they meet the other qualifications for an SBA loan, they will often not have accumulated sufficient equity to contribute to the venture or collateral to secure a loan because of their time in the service.  Although there are sources of subordinated debt from nonprofit organizations, such as the Veterans Business Fund , which could serve in lieu of equity, the SBA should consider relaxing its requirements for veterans, perhaps with financial assistance from the Department of Defense.   Actions such as these would go beyond rhetoric and reward veterans for their immeasurable contributions.