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How Veterans Can Find Funds

The SBA has launched several programs geared at helping vets open up shop.

This story appears in the July 2009 issue of Entrepreneur. Subscribe »

Bad news first: Veteran entrepreneurship, like a lot of things these days, is at a historical low. Fifteen years ago, about 20 percent of small businesses were veteran-owned; today, that number is only about 12 percent. In an effort to increase veteran entrepreneurship, the U.S. Congress and the SBA have launched a number of programs in recent years--throwbacks to the original World War II-era GI Bill--to help vets open up shop. Here's a look.

Patriot Express Pilot Loan
What You Get: Up to $500,000, guaranteed up to 85 percent by the SBA. Interest rates are the lowest available through the SBA-2.25 to 4.75 percentage points over prime-and since it's an express loan, you'll find out within a day whether you're approved.

What You Don't Get: A direct loan from the government. (It's through a bank.)

In Action: As of mid-April, the SBA had guaranteed more than 3,000 loans to veterans, totaling $279 million; the average loan was $85,800.

Good for: Veterans, active-duty service members, reservists, National Guard members and military spouses looking to start or expand a business

Drawbacks: Since local banks do the lending, you'll need a good credit history to get approved.

Success Story: Armed with a Patriot Express Pilot Loan for $170,000, Al Johnson started up Raven International Security Consulting, a company specializing in educating civilian groups on identifying and dismantling IEDs (improvised explosive devices). The Olympia, Wash.-based company, which Johnson started when he returned from an Army tour in Iraq in 2006, now has four full-time employees and has worked with the Department of Homeland Security and civilian police forces.

More information: Contact your local branch of the SBA for business counseling and advice, or visit

Military Reservist Economic Injury Disaster Loan
What You Get: A loan of up to $2 million to help your business survive when you or an employee is called up for active duty. You have a year to apply after discharge or release from active duty.

What You Don't Get: A replacement employee

In Action: As of the end of March, the SBA had approved 318 loans, totaling $28.9 million; the average loan was $91,195.

Good for: Small businesses that will struggle while a key employee is serving abroad

Drawbacks: If you're the owner and are called up, you'll probably want to apply immediately, before you're shipped out, so you can be sure your business will have the capital needed to survive in your absence.

Success Story: Mainstream Global, a Lawrence, Mass.-based company that buys and resells computer hardware and electronics, took a hit when vice president Luis E. Yepez, Jr., 38, was called up by the U.S. Naval Reserves in 2003. At the time, Yepez was one of only three employees in the company. His brother, Juan, secured an Economic Injury Disaster Loan to get the company through the six-month tour. Since Yepez's return, Mainstream Global has thrived and now has 32 employees. "The loan helped keep our business afloat until I got back," says Yepez.

More information:

Veterans Transition Franchise Initiative (VetFran)
What You Get: Ten to 20 percent off initial franchising fees at 385 companies, including Mail Boxes Etc., Dunkin' Donuts and Gold's Gyms

What You Don't Get: A loan

In Action: As of March 2009, 1,370 franchises had been sold to veterans through the VetFran program, while 222 more were pending sales.

Good for: Aspiring entrepreneurs who'd prefer a business model with a proven track record

Drawbacks: You'll need to work within the confines of the franchise structure.

Success Story: After 20 years of flying planes for the U.S. Navy, Cmdr. Peter Turner retired in 2007, planning to transition into a career as a commercial airline pilot. When his Navy buddies advised him against joining the struggling airline industry, he looked into opening his own business and found the reduced franchising fees offered through the VetFran initiative attractive. Now, two years later, he has opened four Dunkin' Donuts franchises in Durham and Raleigh, N. C., and has plans to open 35 more in North Carolina and Minnesota.

More information:

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