WASHINGTON — Veterans’ advocates on Wednesday expressed wide support for a recently introduced piece of legislation that aims to reduce fees for military veterans starting small businesses.
At a Wednesday Senate Small Business and Entrepreneurship Committee hearing, witnesses — including military veteran small-business owners — cited access to capital as a key barrier for former service members looking to build their own businesses.
According to a report by the Institute for Veterans and Military Families, military veterans are over three times more likely to face challenges in accessing capital to start a new business than non-veterans. Many veterans have been forced to rely on their personal savings to start or acquire their own businesses as a result, the study added.
But, the Heroes Business Opportunity Act of 2023 — or HBO Act — would increase access to capital for veteran-owned small businesses if enacted. Under the bill, which was introduced by committee Chair Rep. Jeanne Shaheen (D-N.H.) on Tuesday, veteran-owned businesses would no longer have to pay the Small Business Association’s Guaranty fee for loans up to $1 million.
“There are often a number of unexpected expenses that come up during the early stages of starting or growing a business,” witness and military veteran business owner Chris Guerrette said. “It is legislation such as the HBO Act that quietly but powerfully helps small businesses succeed.”
Guerrette, who has owned the small business Lickee’s & Chewy’s Candies & Creamery in New Hampshire since 2014, told Senators his startup costs were around $350,000, or $100,000 higher than originally planned, due to unexpected costs. Though he was able to pay off his loans to the SBA and other organizations, Guerrette added other veteran-owned small businesses may not have that option.
But, Guerrette also said SBA’s current policies and benefits for veterans allowed him to leave his government job and go “full-time candy” by focusing completely on his business.
Additionally, SBA operates 28 Veteran Business Outreach Centers, or VBOCs, nationwide, which provide “entrepreneurial development resources” to former and active service members, and military spouses interested in starting or growing a small business.
However, some witnesses at the hearing suggested increasing local resources for veteran entrepreneurs — especially those in rural areas — may be more effective than programs operated by federal organizations like the SBA.
Dustin Rhoades, a veteran who owns the small business Ability Tech in Iowa, said his organization’s growth is partially due to financial support from local services such as Iowa State University’s Pappajohn Center for Entrepreneurship. He urged members of the committee to consider “locally-tailored resources” to support military veteran business owners in addition to providing them with access to business leaders who are also veterans.
“Strengthening small businesses — particularly those led by veterans — requires a multiple approach with streamlined communication, tailored training programs [and] flexible funding options,” Rhoades said.
Lisa Shimkat, state director of America’s Small Business Development Center Iowa, reflected Rhoades’ sentiment, also calling on the committee to consider more local support for veteran-owned businesses in rural areas like Iowa.
Resource disparities present between veteran small business owners in rural rather than suburban areas could be alleviated, she said, through collaboration between local and national groups, like the SBDC and SBA.
“There are many entrepreneurs out there that we need to still get to,” Shimkat said. “We can’t do it all as small business development centers. They can’t do it all as VBOCs. But working together we can have a larger impact and really reach more of those [businesses].”
