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Coming Home and Funding New Campaigns: Veterans’ Access to Capital

The views expressed are those of the author and do not necessarily reflect the views of ASPA as an organization. 

By Nicholas Mastron
June 23, 2017


While American veterans’ benefits have existed since the Revolutionary War, most aim to maintain and restore social capital to servicemen and servicewomen and their families. Fewer veterans’ assistance programs target financial capital concerns which could adversely impact these men and women’s abilities to acquire wealth. However, the U.S. Small Business Administration has engineered several innovative bridges to cross historical chasms of veterans’ financial and wealth inequities through business ownership and enhanced financial sustainability.

Historically, veterans who served in particularly dangerous combat theaters accumulated less wealth over lifetimes. These lower wealth factors associate with worse health outcomes simultaneously, leading to both a cycle of poverty and sickness among those who served. Even when veterans were entitled to certain financial assistances, public policies often delayed benefits due to national fiscal management concerns, sometimes leading to public outcry and civic protests.

Recent studies evidence declining economic and employment security among both male and female veterans, suggesting ever-gloomier wealth outlooks for these public servants as traditional employees. Nationally, veterans constitute approximately 11 percent of homeless populations, and another 1.4 million veterans are considered at-risk due to low financial and social support, according to the National Coalition for Homeless Veterans.

Having financial literacy and wealth often correlates with not only increased economic capacity for veterans, but also a greater sense of self-worth that can further resilience and reintegration abilities in civilian life.

Perhaps not the intuitive agency for this issue, the SBA provides a host of services and programs specifically designed to assist in the fiscal autonomy and wealth stability of veterans’ economic pursuits. These components broadly encompass three areas of concern: 1) business development and assistance; 2) business financing; and 3) business-service coordination dynamics. However, utilization rates of these public goods have remained low, suggesting a lack of public awareness for many promising practices.

In looking at business development and assistance, the SBA’s Office of Veterans Business Development (OVBD) seeks to empower veterans, reservists and their families through maximizing entrepreneurial resources. Recognizing the diversity of needs represented by the country’s service members, this office encompasses different veteran subgroups and issues while also fostering community support networks.

Through continuous training immersions like Boots to Business and Veteran Women Igniting the Spirit of Entrepreneurship (V-WISE), OVBD seeks to expands the bases of veterans engaging in self-employment activities while also partnering with other public entities and research institutes, such as the Department of Defense’s Transition Assistance Program and Syracuse University’s Institute for Veterans and Military Families. These cross-sectoral programs function not only as financial education components but also social support networks.

Embracing this public-private partnership model, OVBD also identifies programs that pair entrepreneurially-minded veterans with other business, education, grant-making, contracting and policymaking structures and opportunities, such as Dog Tag Bakery, Inc. program, the U.S. Chamber of Commerce’s Hiring Our Heroes initiative, the U.S. Department of Commerce’s Office of Small & Disadvantaged Business Utilization and the National Center for Veteran Institute for Procurement.

Switching to financing options, the SBA’s various loan programs allow for enhanced capital access channels to many historically disadvantaged business owners, including veterans. While the SBA initially supplied these monetary supports, the agency now serves to federally insure capital and financial products through partner banks and institutions. While most small businesses can utilize many SBA loan programs, SBA incorporates the economic disparities faced by veteran-owned businesses by eliminating or dramatically reducing guaranty fees for loanable funds. Additionally, the SBA increased the guaranteed amounts which qualify for the fee elimination in 2015, and while this temporary policy has since expired, the associated increase in veteran capital access during Fiscal Years 2015 and 2016 constitutes a promising practice.

However, some capital access programs have not been viewed with the same successes. The U.S. Government Accountability Office (GAO) has routinely criticized the potential for fraud and abuse in the Service-Disabled Veteran-Owned Small Business Program. Accountability mechanisms for partnership contract awards from the Department of Veterans’ Affairs (VA) lack unified oversight responsibilities, which could endanger the program’s sustainability. In response, SBA’s programs have recently transitioned away from VA partnerships to more business direct ones in Department of Commerce and the private sector. While these shifts have improved program performance and success rates, low usage among veterans also follows, suggesting a communication breakdown between the VA and SBA in facilitating these transitions.

Finally, when considering how businesses incorporate and react to service obligations, particularly those employing reservists recalled to action, the SBA’s Military Reservist Economic Injury Disaster Loan Program (MREIDL) serves as the flagship operating assistance program for these entities. As the only economic injury program to date for reservists, it allows businesses adversely affected by employees’ calls to service to meet operating expenses through specifically designated loanable funds, longer repayment schedules and lower interest rates.

In coming home, veterans should consider owning their own firm rather than serving in someone else’s company as their next campaign. The SBA provides America’s frontline heroes hope for economic resilience, capacity, and wealth through its public-private networks and partners, through guaranteeing capital accessibility and loans, and through directly supporting veteran-owned businesses upon calls to serve.

Author: Nicholas Mastron is a current PhD student in Public Policy & Administration at the George Washington University, with a field specialization in Gender & Social Policy. His email address is [email protected].

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