Financial Help for Business-Savvy Veterans
When Stephen Aldridge got out of the U.S. Army, he went into business for himself and never looked back. Today, the veteran is president of Artizan Concrete Design in Newport News, Virginia, one of several companies he's built over the last 21 years.
Aldridge financed his early ventures with credit cards, starting small, and building up companies he later sold at a profit. But he warns fellow vets to be wary before jumping into entrepreneurship.
"If you're going to try to buy into a small business or a franchise, make sure you do your due diligence," he says. "The last business I had was a franchise, and it seemed like the only person making any money was the franchise owner."
As a serial entrepreneur, he has advice for fellow veterans who dream of building their own business.
"Be prepared for those times when you don't have work, especially if you're doing a service business," Aldridge says. "Save up your money and finance as much of it as you can yourself."
Vets more likely to become entrepreneurs
Are you a vet thinking about starting a small business? You're in good company. A 2011 study from the U.S. Small Business Administration (SBA) found that veterans are 45 percent more likely to become entrepreneurs than people with no active-duty military experience.
The most recent U.S. Census data from 2007 showed veterans owned about 2.4 million businesses generating $1.2 trillion in annual receipts, with payrolls of 5.8 million employees.
Aldridge says vets benefit from a relentless work ethic and determination - traits that are often instilled during military service. His advice on finding the right business? Go with what you know.
Rather than jump into some new line of work that has a steep learning curve or requires special (and potentially expensive) training, veterans - and, really, most entrepreneurs - should draw on their strengths. This means either pursuing an earlier vocation that draws on experience during life pre-service or adapting military skills to solve problems in the civilian world.
Even veterans who don't have perfect credit may find that their military service opens doors locked to other people.
Where to find business loans and training
The SBA is the first place to look for small business loans for veterans. The Office of Veterans Business Development is an entire division devoted to helping veterans launch their own companies, with mentoring and guaranteed low-interest loans.
Besides funding, the SBA also offers training and opportunities to access lucrative federal contracts, as well as commercial supply chains. Eligibility extends to service-disabled veterans, reservists, active-duty service members, transitioning military and their dependents or survivors.
The SBA also gives preference to veterans through these programs:
- SBA Veterans Advantage. This initiative offers guarantees on loans approved to businesses that are at least 51 percent owned by veterans or military spouses.
- SBA Veteran's Entrepreneurship Act of 2015. The act eliminates the upfront borrower fee for eligible veterans and military spouses for SBA Express loans up to $350,000.
- The Military Reservist Economic Injury Disaster Loan Program. This program provides loans of up to $2 million to cover operating costs that can't be met, due to the loss of an essential employee called to active duty in the Reserves or National Guard.
Other resources for vet entrepreneurs
Along with launching a business, veterans can also benefit from these government and private-sector resources:
- If you were disabled in the service, consider applying for self-employment grants through the Department of Veterans Affairs.
- Get in touch with veteran-focused angel investors, such as Hivers & Strivers, which make early-stage investments in start-up companies founded and run by graduates of U.S. military academies. The firm typically invests $250,000 to $1 million in a single funding round.
- Give crowdsourced Financial Technology (FinTech) a try. StreetShares is an online lending platform that links investors with veterans starting or expanding a business. (The online application takes less than 30 minutes.) Once a veteran is signed up to StreetShares, an online auction period from five to 30 days begins. During that time, the veteran pitches directly to investors for loans from $5,000 to $50,000, with terms ranging from one to five years.
Whichever route you take, don't be shy about asking for the help and support you need. You've earned it.
Steve Evans, a former reporter for SNL Financial and the Richmond Times-Dispatch, writes for MoneyGeek.com.
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