Madam Chairwoman, Ranking Member, and members of the subcommittee, on behalf of Iraq and Afghanistan Veterans of America’s one hundred and eighty thousand members and supporters, I would like to thank you for allowing us to submit written testimony to your subcommittee.  The “Status of Veterans Small Business” is an important issue facing many Iraq and Afghanistan veterans and IAVA welcomes the opportunity to discuss this issue at length with you.

KFC, founded by Army veteran Harland Sanders, FedEx, founded by Marine veteran Fred Smith, and EDS, founded by Navy veteran Ross Perot are just three examples of the many highly recognizable businesses that have been started by veterans. Today, on military installations around the world, our service men and women are conjuring up small business ideas. Whether it’s starting up a local lawn mower service, building a new restaurant or inventing a better mouse trap, veterans are always dreaming big dreams. What better way to stay awake while pulling guard duty at “0-dark-thirty” in a far off country then mentally putting the finishing touches on your new small business pitch. When these veterans return home from Iraq and Afghanistan, many are taking those refined business pitches and starting their own small business. Veterans represent 14.5% of small business owners nationally[i] and their military wisdom to adapt, innovate and overcome serves them well as entrepreneurs.

Repeated deployments and a tough economy have made the dream of successfully running a small business all the more difficult for our nation’s veterans. Strong programs for veteran small business owners do exist but, IAVA recommends the following steps to ensure that veterans have every opportunity to turn those dreams into a reality:

• Develop pre- and post- deployment training modules specifically for small business owners (incorporating SBA’s Balancing Business & Deployment guide).
• Provide National Guard & Reserves additional access to capital, insurance and bonding.
• Offer grants to returning small business owners to help jump start their struggling businesses.
• Ensure future stimulus programs maintain veterans’ preference protections.

Repeated Deployments Take Their Toll

“I had to totally shutter the doors on my construction business.
It put my family in a very difficult position.” – IAVA Vet

National Guard and reservist small business owners often suffer the brunt of multiple deployments; Clients leave, new competitors move in and revenues dry up.

“My business was shut down for approximately 18 months.
Rightfully so, most of my clients moved on to other attorneys.” – IAVA Vet

Many Guard and Reservists feel that current deployment training materials are not geared for the self-employed. IAVA recommends that pre- and post- deployment training modules are developed specifically for small business owners and incorporate SBA’s Balancing Business & Deployment guide.

“People tell me ‘don’t worry, USERRA protects you’ ... against what, myself?”-IAVA Vet

Short notice deployments are particularly hard on small business owners. IAVA believes that the military must continue to do everything it can to develop predictability in its deployment cycles so veteran National Guard and Reserve owned businesses are giving a fighting chance for success.

“Attempted to train a replacement, but lead up time was not sufficient. 
The other employees and subsequently the customers of the business suffered.
 Business was terminated by the middle of deployment.” –IAVA Vet

Lastly, when veterans return home many feel like they are starting from scratch with their business, and they need our help. One suggestion we heard was, “I need help getting advertising. It costs a lot to get going again.” This is why IAVA recommends offering grants to returning small business owners to help jump start their fledgling businesses.

Small Business Help

Navigating through the maze of red tape to A) start a business and B) get it registered as a Disabled Veteran-Owned Business… A small business owner wears a lot of hats, and the soft skills acquired through military experience are not enough, I needed some real hands on experience or time with a mentor to help create a successful enterprise.” – IAVA Vet

For reservist and veteran business owners looking for technical or financial assistance, support is available through the Small Business Administration (SBA) and the Department of Veterans Affairs. Last year, the SBA assisted more than 180,000 veterans, reservists, active servicemembers and spouses through its entrepreneurial counseling and training services.[ii]

The agency offers low-interest capital through the new Patriot Express Pilot Loan program. The SBA Office of Veterans Business Development also operates five veteran-specific business outreach centers and provides federal contracting assistance to veterans, although it has relatively limited resources to accomplish these goals.

“The SBA can preach ‘Patriot Express’ all day long but find a single person that's ever managed to get this loan and I'll buy you lunch!” – IAVA Vet

In addition, the SBA has teamed up with the VA and the International Franchise Association to create the Veterans Transition Franchise Initiative, which offers 30 percent off franchising fees for veterans on nearly 400 businesses including Dunkin Donuts, ExxonMobil, and Gold’s Gym. To do date VetFran has helped more than 1,700 veterans become small business owners.

Veterans can also turn to the VA’s Center for Veterans Enterprise (CVE) for assistance with starting or expanding their businesses. However, since this committee recently held a hearing on this particular issue we would like to associate our comments with the testimony of Joe Sharpe, from the American Legion when he concluded, “The implementation of CVE is small and does not necessarily provide the right assistance to veterans.  The Vetbiz.gov website is not easily navigated and needs to become a more user-friendly website.”

“During my deployment I had to totally shutter the doors on my construction business.
 It put my family in a very difficult position” – IAVA Vet

IAVA believes that the VA must work to mitigate the effect of frequent and lengthy deployments by providing small businesses owners in the National Guard and Reserves with additional access to capital, insurance, and bonding via the VA’s Center for Veterans Enterprise. The Center for Veterans Enterprise should receive appropriate funding and resources to achieve this goal.

Federal Contracting

The Federal Government is the world’s largest buyer of goods and services, with purchases totaling over $425 billion each year.[iii]  IAVA was troubled to learn the Troubled Asset Relief Program (TARP), authorizing up to $770 billion to bailout banks, exempted banks receiving federal bailouts from veterans hiring requirements, while protections for minorities, women and disabled individuals were still included. IAVA believes that TARP should be amended to force compliance with veterans’ preference rules and that all future stimulus programs should not overlook veterans’ hiring preferences.

Conclusion

On April 26, 2010, President Obama took a critical first step at evaluating what needs to be done for veteran small business owners. The new Executive Order will create a veteran-owned small business task force that “will recommend specific improvements in how small businesses are created, including expanded access to capital, advice on how to cash in on lucrative federal contracts and better counseling so that businesses remain on a strong economic footing.”[iv] IAVA applauds this effort, and we urge the Administration to include new veterans in this process.

However, more must be done. IAVA looks forward to working with this subcommittee to improve the “Status of Veteran Small Business,” and create the next Greatest Generation of veteran-owned small businesses. Thank you.

[i] Characteristics of Veteran Business Owners and Veteran-owned Businesses Chapter 5 of The Small Business Economy for Data Year 2006, A Report to the President, http://www.sba.gov/advo/research/sbe_07_ch5.pdf

[ii] Small Business Administration, FY 2009 Performance Report, page 66, http://www.sba.gov/idc/groups/public/documents/sba_homepage/fy_2011_cbj_09_apr.pdf

[iii] http://www.sba.gov/contractingopportunities/index.html

[iv] http://www.armytimes.com/news/2010/04/military_smallbusiness_veterans_042610w/