For many military veterans, the idea of going into business for themselves is an attractive prospect after the discipline and rigors of the armed forces. Veteran-owned businesses are on the rise; as of 2013, more than 2.4 million businesses in the United States were owned by veterans. They make up approximately 9% of all American business, employ 5.8 million employees, and have a total payroll of $210 billion annually.
Veterans, however, face unique challenges in their business ventures. While there are many different options for small business funding, few are geared specifically to veteran-owned businesses. So when it comes to business expansion, veteran businesses can be a bit more limited, due in part to differences between the Small Business Administration—the federal government’s department dealing with small business owners—and the Veterans Administration, which deals with anything involving military veterans.
While VA construction loans exist to help with both purchasing, building, or remodeling a new home, a VA construction loan can’t be used to specifically expand a business; they’re only approved for residential properties. While veteran business owners can’t get a VA construction loan for their business, quite a few options are still available to veterans who are looking to expand their business.
Whether you’re looking for startup funds, expansion, or working capital, a number of programs and funding options exist just for veterans.
What Help Can I Get from the Government for Business Expansion?
The Vets First Verification Program offers veteran-owned businesses the ability to be certified as such, giving them preference for federal and civil contracts. In order to qualify, the veteran business owner will need to provide documentation of service and business ownership, and be evaluated by program officials.
The Service-Disabled Veteran-Owned Business Contracting Program, known as the SDVOSBC Initiative, seeks to set aside a certain number of jobs and contracts specifically for business owners who were harmed or injured during their service. Those contracts can be worth up to $5 million and are only available to veterans classified as having a disability from their service. The initiative helps those veterans compete in a much smaller field for work, instead of the entire industry their business is in.
If you’re looking for a business loan, the Small Business Administration has a free online referral tool that connects business owners with SBA-approved lenders. It works much like other online lenders; after answering some questions about your business, you’ll be expected to provide some documentation, such as a business plan, expense sheet, and financial projections that show what you’ll be using the funds for, and how you expect to pay the loan back.
After 2 business days, you’ll be matched with a list of lenders who are interested in funding your loan; you’ll compare terms and rates, choose a lender, and go through the application process with them directly. The SBA also offers guarantees for loans approved to businesses that have at least 51% ownership by veterans.
On top of this, there are helpful workshops, training, and many other programs for veterans looking to start or expand their business.
What’s Available in the Private Sector?
For those looking outside of government sources, Streetshares is a veteran-run business itself that looks to put other veteran businesses in touch with investors through an online auction service. Business owners can take out loans or lines of credit to help expand their ventures, infuse their business with working capital, or get started in a new business.
The Streetshares Foundation also has a partnership with JP Morgan Chase that offers awards to eligible military members and veterans each month to help their business. First place is $5,000, and second and third place are $3,000 and $2,000, respectively. Businesses are judged on their idea, potential impact of the funds, company history, product-market fit, and how that business will influence the military and veterans’ community.
There are other options on the private market aside from finding individual investors when it comes to funding a business expansion. You could take out a small business loan; in fact, one of the most common reasons for a small business loan is to fund an expansion. These types of loans are only offered to established businesses, so they may be out of the question to a new, upcoming business idea. If just starting out, a business owner should probably look to the federal government for help first as a rule of thumb. Despite this, they are still an option; furthermore, there are online resources available to help veterans decide whether such an option is the right call.
For veterans, expanding a business can be difficult. Gaps in financial history or limited credit due to active service and deployments can make business funding seem like an impossibility. With training, funding, and help from both government agencies and private sector resources, however—all geared specifically for veterans—owning and growing your own business can become much more than just a dream.