Joint Hearing of the Committee on Homeland Security and Governmental Affairs of the U.S. Senate and the Committee on Veterans’ Affairs of the U.S. House of Representatives at 1:00 p.m. CDT.
Witness Testimony of Mr. Louis J. Celli, Jr., U.S. Small Business Administration, Chairman, Advisory Committee for Veterans Business Affairs, and, Chief Executive Officer, Northeast Veterans Business Resource Center, and
Veterans’ entrepreneurship has come a long way over the last few years. In the 1930’s and 1940’s veteran status was highly regarded by the local, national and most importantly, the business community. Veterans’ issues and veteran status usually follow the trend of the prevailing national climate.
In the late 1960’s and early 1970’s America, as a nation continued to grow and mature. As we did we experimented, tested boundaries and struggled for our sense of identity as individuals. As this evolving generation of Americans sought to be independent as individuals, we believed it necessary to rebel against authority. 200 years earlier America was a nation of rebels and in 1970 we were a nation of individuals rebelling.
One of the very unfortunate casualties of that time period was the American GI. Service members represented the closest thing that American individuals could identify with as the “government”, and subsequently misdirected their anger and hostility toward American service members. This misguided stigma damaged the image of the American military for decades and residual damage from that time period can still be felt today.
While most of mainstream America understands the dedication, commitment and sacrifice of today’s armed forces, transitioning service members and military veterans still face discrimination and missed opportunities with regard to employment and self employment endeavors.
When Congress passed the Veterans Entrepreneurship and Small Business Development Act of 1999 (Public Law (PL) 106-50), it stated in its findings that America had not done nearly enough to ‘assist veterans, particularly service-disabled veterans, in playing a greater role in the economy of the United States by forming and expanding small business enterprises.’
There are 7 parts to PL 106-50 which were all designed to operate independently while working toward one common goal. Each of these entities; the SBA office of Veterans Business Development, the VA Center for Veteran Enterprise, the SBA Advisory Committee, the Veterans Corporation, the Veterans Representative for SCORE and all of the others, would theoretically work cooperatively toward the common goal of assisting veteran business owners AND SUPPORT EACH OTHER while WORKING TOGETHER. 106-50 was a 4 year plan, and at the pinnacle of the 4th year all of these agencies, idealistically would have been working together and supporting each other so they might serve a greater population of veterans as a team.
Herein lies the problem. Rather than work together, each of the agencies chose their own path and developed their own mission accordingly. Congress had intended that TVC be the core element at the center of this initiative and lead the veteran entrepreneurship mission with the assistance and support of the federal agencies into the 21st century and beyond. What they could not have predicted was that in the absence of direct supervision, none of these separate entities felt obligated or responsible to cooperate. Thus, the VA went in their direction, the SBA in their direction, DoD never even showed up and TVC was left an orphan. A 12 million dollar orphan without any entrepreneurs or nonprofit experience to build this new business.
Good morning Chairwoman Herseth Sandlin, Ranking Member Boozman and members of this Subcommittee. Thank you for the invitation to come before you and discuss veteran entrepreneurship.
It’s been 7 years since the unanimous passage of Public Law 106-50, and this committee now asks “How are we doing?”
My name is Louis Celli and I am a 22 year veteran of the United States Army, a Service Disabled Veteran and have started 2 businesses. I am the Chairman of the SBA’s Veterans Small Business Advisory Committee
You have assembled before you today some of the most renowned names in the veteran community, you have heard their testimony and you have listened to the needs of your constituents.
So now, what do we know? We know that the program hasn’t hit the mark, not yet. We know that the federal agencies and federally funded programs charged with carrying forth this plan to promote and defend veteran entrepreneurship all believe that they are hitting the mark. We know that the veterans aren’t so sure.
What does that mean and what can you do about it? It means that when you set your own goals, and standards by which success is measured, success is easily achieved.
I retired in 2002 as an Army Master Sergeant. When I was on active duty, my job was to take care of my soldiers, and when I was working with Army Recruiting Command, my job was to reassure the parents of the new soldiers joining the Army that their sons and daughters were going to be protected and taken care of. I was then, and I am still today proud of our armed forces and proud to have worn our uniform.
One of the hardest things for me now, is to be working with returning veterans as they process through Walter Reed and I feel a deep sense of guilt; I feel like I have let them down because I am not out there today in a hummvee protecting them. I have to keep reminding myself that it’s not my job anymore, I’ve tried to go back but I can’t, I am 40% disabled and I am no longer qualified to serve in the Army, and it’s hard. These men and women are hurt and in some cases hurt bad.
7 years ago, we passed a law that was meant to address the needs of American Service Men and Women who wanted to compete as business owners in the American economy they fought so hard to protect.
7 years ago we were riding high on a nation at peace and a full strength military.
7 years ago, we knew that we hadn’t done enough to assist veterans, particularly service-disabled veterans, in playing a greater role in the economy of the United States by forming and expanding small business enterprises (PL 106-50).
7 years later, were still not there.
Why? No program management.
You created the right tool but put in place no measures for success, oversight or accountability. You charged the VA, the SBA, TVC with building programs, told all of the other federal agencies to support this effort and closed the book. No one was put in charge. Since no one was in charge, and no standards were set, who could say whether the agencies or the corporation was complying or not?
Well, based on the fact that we are here today and this is the third Congressional hearing in almost as many months regarding the same issue, it’s apparent that your constituents are not satisfied, veterans and non veterans alike. This has become such an important issue that congressional leaders are working together in uncommon fashion as represented here today by the Honorable Congresswoman from California, Congresswoman Daily who has been asked to attend as a guest of this committee.
It may be time that we take a good hard look at restructuring this program and assemble all of these independently moving parts into a cohesively, high functioning machine. We would save money, effort and time and it would finally put an end to the turf wars which have plagued this program from the beginning.
Congress needs to establish an office to manage the program, a “Veterans Business Program Management Office” and it should be an office with federal authority. This office should be responsible for monitoring, assisting, management and oversight of;
- Veterans Entrepreneurship Advocacy
- Veterans Entrepreneurship Training
- Veterans Professional Skills Certification
- Veterans Federal Procurement
- And, assist and promote Veterans Procurement at the state level)
- Promotion of Public/Private Partnerships with regard to Veterans Entrepreneurship, Small Business and Employment
- Entrepreneurial Vocational Rehabilitation Case Management
- Compensated Work Therapy Training Directorate
This office should report directly to The President of the United States and to Congress. Either This Committee, the Small Business Committee or a new Committee comprised of representatives of each.
I have been approached by companies, small businesses and entrepreneurs, both veteran owned and non veteran owned who have offered to build complete companies with the sole intention of employing only disabled veterans. We need a program which assists them as well.
The written portion of this testimony contains detailed programs and suggestions for implementation. I would be happy to continue to work with your offices to build upon this very important and very necessary program.
Members of Congress, I can’t protect these veterans any more, but you can. Help us. Help us build a program that will work and that will be around long after we are gone, benefiting Americas warriors wounded and whole, the men and women who have sacrificed so much and to whom we owe so much in return.
We’re not all Democrats, or Republicans, or Veterans, but we are all Americans. Each and every one of us in this room have benefited from the sacrifices of time, sweat and blood our American Service Members have made and continue to make for us each day.
Thank you for holding this hearing and thank you for your continued interest in veterans entrepreneurship.
National Veterans Business Program Management Office
Program management office of
National Institute for Entrepreneurial Research and Development
(this is a very simplified overview of this suggestive program)
The National Institute for Entrepreneurial Research and Development will be the headquarters for the Entrepreneurial Doctrine Command.
The Entrepreneurial Doctrine Command will be the national authority for entrepreneurial development. This command will be assembled from a co-operative group of sources of both government and non-government representation.
All “policy” will be the result of recommendation from the advisory board but will be ultimate decided on by the command director.
Office of Economic Research
Office of the Small Business Administration
Office of Minority Development
Office of Veteran’s Affairs
Office of Veterans Service Organizations
Office of Federal Procurement
Office of State Procurement
Department of Federal representation
Department of Defense
Department of the Interior
Department of Transportation
Department of (all)
Procurement preparation and strategic positioning
Major training commands:
Small business start-up
Small business growth
Independent contractor structure
Non-profit organization development
Severely Disabled Self-Employment Directorate
Previously Incarcerated training Directorate
Community Outreach Development and Community Based Organization Development program
Inventors and New Market Product Concept College
Home based business
Compensated Work Therapy
Office of Public/Private Partnership
Business start up
Business etiquette (speaking, eating, dressing)
Veteran Owned Business Deployment Action Plan
Extended deployment of our National Guard and Reserve forces has caused extreme hardship and has closed the doors of many of American Veteran Owned Business. This program is designed to assist the Veteran Small Business Owner to prepare for the businesses continued operation and sets forth an action plan to assist and support the Veteran and their business should the business owner be called upon to serve.
A detailed action plan will be developed as an Operations Order setting forth and addressing critical operational issues. At a minimum, the plan will have;
- A notarized Letter Of Instruction from the Veteran Business Owner
- An up to date business plan
- Checks and or bank cards
- Power of attorney
- Alert roster and contact phone numbers
- Financial template
- Assets and liabilities
- A video tape of the business owner conveying his/her wishes and directives in their absence
- Copies of insurance policies, promissory notes, deeds, titles, articles of incorporation, etc.
- A Last Will and Testament
- Copies of deployment orders (where applicable)
- Contact numbers for military unit of assignment and branch manager
- Copies of all keys, access codes and combination numbers
- Back up electronic media data
- Any additional information or object that will assist in the smooth running of daily operation for the business
It is understood that successful execution of this plan will depend on the structure of the business having been built in the franchise model as a “Turn Key” business. In order to facilitate this, a well planned and detailed organization chart will be documented. Each duty and responsibility entered into the Organizational chart must have a complete job description and “employee manual” which details and explains the duties and responsibilities assigned that position.
The education and construction process of this program will require a unique commitment from the business owner as well as a solid educational/mentorship program.
While the commercial programs exist to accomplish the intended results, these programs are lengthy (18 to 24 month programs) and expensive ($450.00/month X 24 months = $10,800./person). A streamlined, accelerated and more cost effective program can be developed. The resulting program would allow the Veteran to complete the process in 6 to 12 months.
Additionally, a Memorandum of Understanding or contract would be developed between the Veterans Business Resource Center (VBRC), the mentored business and the Small Business Administration (SBA) as a method of registering and tracking these businesses.
Eventually, businesses who successfully complete the Action Plan and have their plan registered with the VBRC and SBA would be available for emergency funding special tax consideration to assist and defray any costs associated with extended military deployment.
Guard and Reserve Business Tax Forbearance Initiative
Concept: To protect Veteran Business owners who become activated pursuant to military orders IAW Section 101 Title 10 United States Code from Business Tax Liability which may result in extreme financial hardship on the business and the veteran.
Action: To authorize a business tax forbearance whereby allowing the selected category of duty status military member to deposit their estimated federal business tax liability payments into an interest bearing trust account, thus authorizing tax forbearance for a period of time equal to the amount of active duty time performed plus 180 days. This forbearance is to begin upon the effective date of the service member’s orders and all tax obligations are to be satisfied in full no later than 180 days following the termination of such orders.
Interest – Any and all interest realized from the deposits of this program are to be retained by the corporation and will not be considered capital gains or profit and should subsequently be tax exempt. The maximum allowable deposits subject to this protection shall not exceed 2 times the actual tax liability. Any deposits enjoying interest in excess of 2 times the finally established tax liability will be subject to standard taxation IAW the corporation’s tax burden. (I allowed for up to 2 times the tax burden for 2 reasons, 1- businesses pay an estimated tax based on sales forecasts and 2- to provide businesses in this category an incentive to establish a savings that will help to revitalize the business when they return to the business.
Failure – Failure to satisfy the existing tax obligation by the end of the 180th day following the return of the business owner will result in the businesses being subject to the standard interest and penalties subject any business who fails to satisfy its tax obligation. The date that such interest and penalties will be assesses will be the 181st day following the termination of the duty orders to which the member entered this forbearance.
Multiple and concurrent assignments – Each period of active duty will be treated as separate and independent actions if separated by more than three duty days (the establishment of a duty day needs to be addressed. This is important because in an effort to maximize training funds, a military unit may issue a consecutive series of active duty orders for 5 day periods to be paid for from one accounting method and pay the military member for the weekends using another payment account which does not necessarily require active duty orders. Further, home station active duty may be restricted to 5 day increments, again due to budget considerations). At no time will a unit create or extend active duty requirements for the sole purpose of qualifying a business owner for participation in this program.
Inclusion of Veteran Owned Companies to
Section 7 (j) of the Small Business Act
Draft resolution for amendment to U.S. Small Business Act of 1953, Section 7 (j), to include “Veterans” and “Veteran Owned or Operated”.
Congress finds the following:
The United States has done too little to assist veterans, particularly service-disabled veterans, in playing a greater role in the economy of the United States by forming and expanding small business enterprises.
The United States must provide additional assistance and support to veterans to better equip them to form and expand small business enterprises, thereby enabling them to realize the American dream that they fought to protect. [PL 106-50, ‘‘Veterans Entrepreneurship and Small Business Development Act of 1999’’]
It is the declared policy of the Congress that the Government should aid, counsel, assist, and protect, insofar as is possible, the interests of small-business concerns in order to preserve free competitive enterprise and to insure that a fair proportion of the total purchases and contracts or subcontracts for property and services for the Government be placed with small-business enterprises. [The U.S. Small Business Act of 1953]
The mission of the U.S. Small Business Administration’s (SBA’s) Office of Business Development (BD) is to assist economically and socially disadvantaged businesspersons achieve competitive viability in the marketplace. To that end, SBA has been authorized, under Section 7(j) of the Small Business Act, to enter into grants, cooperative agreements or contracts, with public or private organizations that can deliver management or technical assistance to individuals and enterprises eligible for assistance under the Act. This assistance is delivered through the 7(j) Management and Technical Assistance Program to 8(a) certified firms, small disadvantaged businesses, businesses operating in areas of high unemployment or low-income or firms owned by low-income individuals [add “or firms owned or operated by veterans” here].
SBA Regional Finance and Bond Surety
Veterans Small Business Advisory Councils
The Administrator of the SBA charges each Region to require their districts to assemble SBA sponsored Veterans Small Business Finance and Lending Advisory Councils consisting of a consortium of commercial lenders, bonding agents and Veteran Business Owners for the purpose of;
1. Review, coordinate, and monitor plans and programs developed in the public and private sectors that affect the ability of small business concerns owned and controlled by veterans to obtain capital, credit and bond surety.
2. Promote the collection of business information and survey data as they relate to veterans and small business concerns owned and controlled by veterans regarding small business financing and bonding ability.
3. Develop and promote initiatives, policies, programs, and plans designed to foster small business financing and bonding programs owned and controlled by veterans.
By getting finance and bonding professionals directly involved with the building and planning stage of Veteran Small Business Financing programs, they will instinctively support and promote Veterans Small Business Interests. The theory is the same as when a Non-Profit company invites community members to sit on their Board of Directors. The Board members take a personal interest in the promotion of the organization and put added emphasis into networking and the promotion of these organizations to assist in the organizations success.
The same theory applies here. The lending and bonding institutions responsible for developing “suggestions”, “incentives”, “programs” and other work on behalf of veterans will have a personal and professional stake in the success of the program thus giving the programs “top down” emphasis.
This Council would be by invitation only and participants should be “recognized” by the administration in a creative way which may include;
- Certificate of participation signed by the President of the United States
- Annual invitation and award recognition at the national SBA Small Business Week celebration
- SBA Co-branding opportunities, SBA funded brochures
- SCORE recognition and partnership opportunities
There are a number of more aggressive “incentives” these are some of the more cost effective and least legally cumbersome. Other incentives could include a more favorable rate for lenders who choose to participate or “preferred” processing incentives or discounted processing fees.