Veteran-owned businesses represent a little less than 10 percent of all U.S. companies, employ 5.03 million workers, combine for an annual payroll of $195 billion, and generated $1.14 trillion in revenue, according to the SBA’s 2017 report Veteran-Owned Businesses and Their Owners.
Each year, the SBA celebrates, connects, and empowers service members during National Veterans Small Business Week. From Nov. 4-8, SBA district offices, resources partners, and other organizations celebrate the veteran- and military-owned business community.
This year’s theme is Mission #VetBiz Success, in which the SBA is highlighting the tools and resources used to help veterans on their journey to small business success. Whether you’re just starting your business or expanding into new locations, SBA can help with information on:
- Transition Assistance
- Entrepreneurial Training
- Stakeholders and Resources
- Access to Capital
- Government Contracting
- Disaster Assistance
“National Veterans Small Business Week is dedicated to celebrating the nation’s 2.5 million veteran-owned businesses who contribute nearly $1 trillion each year to the U.S. economy,” said SBA Acting Administrator Chris Pilkerton. “The SBA is proud to collaborate with our district offices, resource networks, and agency partners to empower veterans throughout every stage of their entrepreneurial journey.”
Veteran business loans refer to any type of debt financing available to military veterans or their spouses (in most cases) designed to help veteran entrepreneurs grow or start a business. The funding can be used for working capital needs or to hire new employees, open or expand a new location of an existing business, purchase or lease equipment, acquire a business.
Below are some of the options available to veteran entrepreneurs:
SBA 7(a) loan program
The SBA 7(a) loan program is the agency’s most popular lending program. Through government guarantees, approved SBA lending partners (usually banks) are incentivized to provide funding in amounts up to $5 million for small businesses. Many of veteran-owned small businesses might not otherwise qualify for bank loans. (The federal agency itself does not directly make loans and requires additional paperwork to apply for SBA-backing.)
While SBA 7(a) loans are available both to service men and woman and non-veterans alike, business owners (and their spouses) who served in the military do get some additional benefits. For instance, the SBA’s Veterans Advantage reduces the fees on guaranteed portions of 7(a) loans of up to $350,000. Thus, veterans could save several thousand dollars on their loans through the Veterans Advantage program since because with an SBA-backed loan, the borrower is required to pay an upfront loan guarantee fee in addition to typical closing costs.
Additionally, veteran-owned businesses that qualify also do not have to pay an upfront guarantee fee for SBA Express loans, a program that reduces the amount of time it takes to apply for and receive SBA 7(a) loans of up to $350,000.
In order to qualify for these veterans’ fee reductions, the company must be at 51 percent owned or controlled by a veteran who meets eligibility requirements.
Military Reservist Economic Injury Disaster Loans
Entrepreneurs who are military reservists face unique challenges when they are called for deployment. An extended deployment could mean financial hardships and gaps in payment history, making it difficult to for a reservist business owner to secure get a traditional small business loan.
The SBA’s Military Reservist Economic Injury Disaster Loan (MREIDL) program offers low-interest loans of up to $2 million to eligible businesses whose owner or key employee has been called to active-duty status and, as a result, is unable to pay ongoing operating expenses. These loans aim to give businesses the money they need to pay their expenses until the service member can return.
Starting a business can be a daunting task, even during good economic times. However, if anyone possesses a “can do” spirit, it is a veteran of the United States armed forces. Fortunately, veteran small business loan assistance programs have been established in recognition of the personal and financial sacrifices made by service men and women. In addition to loan programs, veterans can take advantage of grant programs, mentoring and training opportunities, networking opportunities, and assistance available to help secure government contracts.
SBA programs feature customized in-person classes and online courses to give veterans the training to succeed. These programs provide information about the fundamentals of business ownership, SBA resources, and small business experts. For example, Boots to Business is an entrepreneurial program offered on military installations around the world and a training track of the Department of Defense (DOD) Transition Assistance Program (TAP). Boots to Business Reboot extends the entrepreneurship training offered in TAP to veterans of all eras.