Veterans have been a key part of American entrepreneurship, bringing leadership, discipline, and problem-solving skills into their small businesses. Today, there are more than 1.6 million veteran-owned businesses, representing 4.3% of all U.S. business owners. However, despite strong skills and a passion for entrepreneurship, veterans face challenges accessing funding for their business.
In this overview, you’ll learn the current landscape of business funding for veterans, including what resources, programs, and funding options are available, and how to access funding for veteran-owned businesses to support their success.
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The lending landscape for veteran business owners
Historically, veterans have been more entrepreneurial than non-veterans. However, despite higher participation rates and the significant portion of veterans in the small business community, their path to funding has been more complicated than non-veteran entrepreneurs.
Access to capital remains a significant challenge for all veteran entrepreneurs, with veterans being more likely to experience challenges with credit availability. In fact, the 2018 “Veteran Entrepreneurs and Capital Access” study conducted by the U.S. Small Business Administration (SBA) and the Federal Reserve Bank of New York found that:
- Veterans more often applied for small loans at or below $100,000, which are more difficult to obtain from traditional lenders and banks.
- Veterans often have an inconsistent credit history due to their service and lifestyle, leading to less-than-perfect credit.
What are the key characteristics of veteran entrepreneurs?
As a result of their military experience, veterans exhibit a set of skills that uniquely position them for success in business. Here are a few of the key characteristics veterans possess that make them good entrepreneurs:
1. Military experience reinforces discipline
Entrepreneurs must be prepared for obstacles in the road because as most know, they are sure to come. Veterans have the ability to stick with difficult tasks until they’re complete, despite any hardships they experience along the way.
2. Veterans aren’t intimidated by a challenge
Veterans are unlikely to quit at the first sign of a challenge and can achieve small-business success by seeing problems as opportunities. Their boldness and persistence are two entrepreneurial benefits that will help them achieve their goals.
3. Veterans are strong leaders
Veterans’ experience with leadership during their service uniquely positions them to be leaders in business. Effective leaders should inspire loyalty and conviction in their teams, qualities that can be found throughout the ranks of the military.
4. Veterans are resourceful
Entrepreneurs must continuously use what’s at hand to accomplish tasks. Veterans’ ability to be resourceful while finding innovative solutions to problems is an entrepreneurial benefit. Luckily, there are numerous small business resources available specifically for veterans.
What resources are available to veteran-owned businesses?
There are many offices and resources available to veteran entrepreneurs:
Veteran Business Outreach Centers (VBOC)
The U.S. Veterans Business Outreach Centers (VBOCs) provide free, tailored entrepreneurial development services to veterans, active-duty service members, and military spouses. They also offer workshops, training, counseling, and mentorship opportunities. There are VBOCs located across the country. You can enter your zip code to find the nearest VBOC.
U.S. Small Business Administration (SBA) Office of Veterans Business Development
The Office of Veterans Business Development (OVBD) is one of the most comprehensive sources for veterans opening or growing small businesses. It offers a full range of services to veterans, service members, National Guard and Reserve members, military spouses, and family members, including business training, counseling, and resource-partner referrals.
U.S. Department of Veterans Affairs Office of Small & Disadvantaged Business Utilization
The U.S. Department of Veterans Affairs Office of Small & Disadvantaged Business Utilization (OSDBU) is a federal office that helps veterans gain access to economic opportunities by developing policies and programs to maximize the procurement-ready veteran-owned small businesses and service-disabled veteran-owned small businesses in federal contracting.
D’Aniello Institute for Veterans and Military Families (IVMF)
The D’Aniello Institute for Veterans and Military Families (IVMF) at Syracuse University is an academic institute that empowers service members, veterans, and their families. It offers no-cost career training, professional certifications, entrepreneurship education, and community support resources.
National Veteran-Owned Business Association (NaVOBA)
The National Veteran-Owned Business Association (NaVOBA) is a nonprofit dedicated to creating corporate contracting opportunities for veteran entrepreneurs. It connects corporate professionals and Certified Veteran Business Enterprises (VBE) through various networking and training events.
What special programs are available for veteran-owned businesses?
There are many special programs available to veteran entrepreneurs:
VOSB and SDVOSB Certifications
The Veteran-Owned Small Businesses (VOSB) and Service-Disabled Veteran-Owned Small Businesses (SDVOSB) programs are provided by the U.S. Small Business Administration (SBA). The goal of these programs is to award at least 5% of all federal contracting dollars to service-disabled veteran-small businesses each year.
To qualify for the disabled veteran’s business program certification, you must meet the following criteria:
- Be identified by the VA as a veteran or service-disabled veteran
- Be a small business by the SBA’s size standards
- Be at least 51% owned and controlled by one or more veterans or service-disabled veterans
- For veterans who are permanently and totally disabled and unable to manage the daily business operations, their business may still qualify if their spouse or appointed caregiver is assisting in that management.
Certified businesses can bid on government contracts with limited competition and are also eligible to compete in the program’s set-aside contracts.
Boots to Business (B2B)
Boots to Business (B2B) offers entrepreneurial education and training through the SBA as part of the Department of Defense Transition Assistance Program (TAP). B2B provides service members and their spouses with business ownership and entrepreneurship classes, resources, and support for a successful transition.
V-WISE
Veteran Women Igniting the Spirit of Entrepreneurship (V-WISE) is operated by the Institute for Veterans and Military Families at Syracuse University in New York. The organization provides training programs in entrepreneurship and small business management to women veterans. Here’s who can qualify for participation in the program:
- Honorably discharged women veterans of any military branch or service area
- Active-duty women service members of any military branch
- Women spouses and same-sex life partners of above (including widowed spouses and partners)
The program consists of three phases:
- 15-day online course
- 3-day entrepreneur training event
- Ongoing mentorship, support opportunities, and training for graduates
Qualified participants are responsible for paying a one-time fee of $75, and the SBA and private-sector partners fund the remaining program costs.
Certified Veteran’s Business Enterprise (VBE) and Certified Service-Disabled Veteran’s Business Enterprise (SDVBE)
The National Veteran-Owned Business Association (NaVOBA) offers programs that set the national benchmark in certification for all veteran-owned businesses. The Certified VBE and SDVBE credentials open the door to more opportunities by delivering credibility and a competitive edge.
Veteran Small Business Certification (VetCert)
The Veteran Small Business Certification (VetCert) is a veteran certification program managed by the SBA. It allows veteran-owned businesses to qualify for exclusive federal contracting opportunities such as federal sole -source and set-aside contracts across the federal government.
What funding options are available for veteran-owned businesses?
Along with access to specific opportunities, there are many funding options for veteran-owned businesses with special rates and terms.
Military Reservist Economic Injury Disaster Loan (MREIDL)
The Military Reservist Economic Injury Disaster Loan (MREIDL) is an SBA program that provides up to $2 million in working capital to eligible small businesses. It’s designed to meet the standard and necessary operating expenses that a business can’t cover because an essential employee or owner was called to active military duty.
Veterans Advantage Program
The SBA 7(a) loan program features the Veteran Advantage program, which provides benefits to veterans, active service members, and their immediate families. It offers flexible underwriting procedures, low rates, favorable terms, and no upfront guaranty fees for veterans. This loan can be used for many purposes, like purchasing equipment, refinancing debt, or funding new projects.
Applicants must be U.S. veterans and own a business with at least 51 percent veteran ownership. Turnaround timelines and limits can vary. The highest available loan amount is $5 million.
CDFI loan programs
Community Development Financial Institutions (CDFIs) are mission-driven financial institutions certified by the United States Department of the Treasury’s CDFI Fund. These include banks, venture capital funds, loan funds, credit unions, and community lenders like Pursuit.
As a veteran, you can receive extra benefits of securing a loan through a CDFI:
- Lower interest rates
- Higher likelihood of approval
- Simple, straightforward loan products
- Technical and training assistance, including mentorship and advisory services
Veteran business owners often choose to work with a CDFI lender because of its flexible approval requirements and ongoing guidance and support. As mission-driven lenders, CDFIs are considered non-profit entities and work to support the businesses they serve.
Veteran credit unions
There are many credit unions catered to veterans that offer exclusive rates and specialized products. Some examples include Navy Federal Credit Union, USAA, and Pentagon Federal Credit Union.
Veteran grant opportunities
There are many business grant opportunities available for veteran entrepreneurs. While every county or city has some manner of veteran grants, here are a few resources you can visit to find grant opportunities near you:
- The McNulty Veteran Business Center is one of the best sources for New York State.
- Grants.gov is a centralized system that allows organizations to find and apply for more than 1,000 federal grant programs.
- NerdWallet regularly updates the small business grants available for veterans.
Although grants can be extremely beneficial, they are also very competitive and may offer limited funds.
Pursuit supports veteran business journeys
Pursuit is proud to serve the veterans who have done so much for our country. As a leading community-focused lender, we offer veteran loans and insightful resources to support your success. If you’re a veteran interested in starting a business, or have launched and are looking to grow, please contact us today!
We have a long and successful history of serving veterans and their families, and we’d love to help you, too.
