Encouraging Business Ownership for US Veterans | Corbett Hub

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Boosting the Underrepresented: The Many Resources Available that Encourage Business Ownership for Veterans

Veteran-owned Businesses are Essential to U.S. Economy, But are these Small Business Buyers Leveraging all Their Available Resources?

In October 2021, the U.S. Census Bureau reported that an estimated veteran-owned businesses made up about 5.7% (331,151) of all businesses.

While veteran-owned businesses make up only a fraction of all businesses, this sector is growing rapidly and are making a significant impact on the growth of the U.S. economy.

In the last few years, veteran-owned businesses have generated billions in revenue and jobs. Here are a few stats supporting this as provided by the Census Bureau 2020 Annual Business Survey:

Veteran-owned businesses had an estimated $963.4 billion in receipts, 4 million employees and about $191.6 billion in annual payroll.

Resources available for Veteran Business Owners

Market research shows that many of the financing initiatives to veteran demographic segments have a heavy emphasis on non-recourse lending to startups. However, many (including this author) believe that a lower risk opportunity for the SBA to create jobs in underserved segments and long-term value is by executing operating business acquisitions as an alternative to startups that are promoted by so called “Accelerators” and “Business Incubators”. These are commonly found in major urban areas nationwide.The key is getting these acquisitions financed. Fortunately, the SBA offers several programs to assist with financing and other aspects of successfully owning a business.

The SBA: Financing and Business Development Programs

The Small Business Administration offers many programs to assist operating business acquisitions by Veterans and to then support their growth.

There is no SBA loan that is specific for veterans. However, the SBA Veterans Advantage Program waives the guarantee fee on SBA Express loans—which typically saves you about 3% on loans over $150,000.

SBA Business Development Programs

HUBZone Program
The government limits competition for certain contracts to businesses in historically underutilized business zones. It also gives preferential consideration to those businesses in full and open competition.

Joining the HUBZone program makes your business eligible to compete for the program’s set-aside contracts. HUBZone-certified businesses also get a 10% price evaluation preference in full and open contract competitions.

SBA Trainings Programs
The Emerging Leaders Initiative is an intensive executive-level series intended to accelerate the growth of high-potential small businesses in America’s underserved cities. The program provides customized training for C-level executives with demonstrated business sustainability. Participants create a three-year strategic growth action plan with benchmarks and performance targets to help them emerge as self-sustaining businesses creating jobs and building communities. 

Alternative Financing Programs

As an alternative to startup-based financing programs and the SBA, there are funds and organizations that focus on financing acquisitions within veteran communities. One such group is “New Majority Capital” of Providence, RI. Their target deals have 4X EBITDA or lower and all loan applicants must attend a five-week business management course that they manage. New Majority Capital’s mission is to offer an alternative “non-extractive funding source” to the SBA for their clients, without the need for personal guarantees.

“Acquiring a business from a retiring owner and running it while maintaining the past owner’s legacy is one of the ways that can help close the wealth gap in this country. That is what drives our work at New Majority Capital,” said Havell Rodriguez, Founding Partner of New Majority Capital.

Reach Out and Learn More

Many programs exist to help veteran business buyers achieve their entrepreneurial goals; you just need to know where to look. Start your journey by contacting the traditional and non-traditional lenders in your community that emphasize acquiring an operating business. You should also seek a detailed understanding of SBA programs available for business acquisitions, business development, and other resources to help you succeed.

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