Veterans, Retiring Military and Their Spouses Get a Break

Fifty years ago, I enlisted in the Army National Guard at New York City’s Park Avenue Armory. The military is long gone from the armory. Instead, the architectural landmark is being used to host art and antique fairs. And even though much has changed since I soldiered in the 55,000 square foot drill hall, the U.S. Small Business Administration has more recently introduced its Patriot Express Program to honor the men and women who served in the military.

Veterans, retiring military and their spouses are eligible for SBA-guaranteed loans up to $500,000 under the initiative. Unlike the agency’s 50 percent guarantee for basic express loans, Patriot Express provides lenders with 75 percent to 85 percent guarantees, depending upon the loan size.

 All of SBA’s express loan programs permit lenders to use the same forms that they would for conventional small business loans. Most of government-related paperwork is eliminated. “I happen to think that when you can get a government guaranteed $500,000 loan on six pieces of paper you’ve got a good program going,” John Dunn, the former assistant district director of SBA’s south Florida district told me. He acknowledged, however, the higher guarantee amount would not turn a weak loan applicant into a strong one. “All we are trying to do is expand the universe to pull in our veterans to see if we can induce the commercial lenders that operate in the SBA world, to reach out a little bit more.”

Reaching out a little more means that some lenders are willing to equate a higher guarantee to lower risk. So if a veteran accumulated less cash savings and her credit score slightly misses the mark, the lender might still be willing to make the loan. Even if the veteran lacked hard assets to pledge, SBA says that lenders may forego collateral for loans under $25,000, and up to $50,000 in some cases.

Borrego Springs Bank and Superior Financial Group, two California-based lenders, make non-collateralized Patriot Express loans below $50,000. That is because it is cost-prohibitive to track collateral nationwide for such small loans. In the event of default, for example, it would cost more to gather up and sell the collateral than taking the loss on the loans.

On the other hand, Atlanta, Ga.-based SunTrust, another prolific Patriot Express lender, will go up to $500,000 in locations where they have branch offices. In addition to Patriot Express, SunTrust lends up to $5 million for the basic SBA 7(a) Loan Program.

“We have a few programs to support veterans,” says Mike Rozman, co-president of BoeFly, a leading online matchmaking service for borrowers, lenders and investors. One program “provides free BoeFly access for veterans seeking financing to join a franchise brand that is a participant of VetFran,” a program designed to discount veterans’ cost of purchasing a franchise.

Mary Thompson is the chairperson of the International Franchise Association’s VetFran committee and also the president of Mr. Rooter franchise system. “I want to help veterans, but it’s not just that,” she said in a report by Franchise Business Review. “There’s a very selfish side to this; vets make great franchisees.” The military experience makes veterans good prospects for franchising, according to Thompson, because “veterans grow up understanding two things; systems and discipline.”

BoeFly also provides free access to veterans that graduate from Entrepreneur Bootcamp for Veterans with Disabilities. The entrepreneurship program was first introduced by the Whitman School of Management at Syracuse University in 2007 and has since spread to campuses nationwide. According to the College of Business at Florida State University, the program “offers cutting edge, experiential training in entrepreneurship and small business management to soldiers, sailors, airmen, and marines disabled as a result of their service.”

BoeFly is an online marketplace where veterans and non-veterans receive multiple financing offers from the nation’s most active financiers. According to the company’s web site, “BoeFly revolutionizes how deals get done by seamlessly connecting all parties, including lenders, borrowers, franchisors, investors, buyers and sellers to a potential transaction and facilitating the efficient completion of these transactions.”

In fact, BoeFly’s chief executive officer told me that he used the company’s system to quickly snag multimillion dollar offers to finance his income-producing property. “We almost immediately received about 15 interested lenders,” Robert Tannenhauser said. “We were able to close the loan within approximately 30 days at a great rate with a large bank.”

 Jerry Chautin is a former entrepreneur, commercial mortgage banker and business lender. He writes and blogs about business and real estate for several publications and is SBA’s 2006 national “Journalist of the Year.” Jerry is a volunteer business mentor with SCORE, “Mentors to America’s Small Business,” offering free business advice. Post your comments and ask questions on this Blog or send Jerry an e-mail.

Copyright © 2012 Jerry Chautin — All rights reserved.