The new stimulus package opens up many lending opportunities for veterans. Sometimes the ideal opportunity when you transition to civilian life doesn't include working for someone else. Veterans, National Guard, Reservists and their spouses have another option to consider---owning a business. The stimulus bill will temporarily increase the SBA’s guarantee on surety bonds from $2 million to $5 million. It will allow small businesses to bid on bigger projects.
The Small Business Administration has pointed out some major things that can pertain to veterans and the many business opportunities available to them.
• $375 million for temporary fee reductions or eliminations on SBA loans and increased SBA guaranteed shares, up to 90 percent for certain loans
• $255 million for a new loan program to help small businesses meet existing debt payments
• $30 million for expanding SBA’s Microloan program, enough to finance up to $50 million in new lending and $24 million in technical assistance grants to microlenders
• $20 million for technology systems to streamline SBA’s lending and oversight processes
• $15 million for expanding SBA’s Surety Bond Guarantee program
• $25 million for staffing up to meet demands for new programs
• $10 million for the Office of Inspector General
The bill also authorizes refinancing for certain SBA loans so borrowers can expand their businesses on favorable terms, and expands leverage capability for Small Business Investment Companies.
These things are all important ideas to keep in mind when you are thinking about the business opportunities available to you.
To find out more information check out sba.gov.
Thursday, February 26, 2009
Wednesday, February 18, 2009
Starting Your Own Business
Financing for Veteran Owned Businesses
Series 1 of 3
Owning your own business can be an exciting opportunity versus working directly for an employer. But, is business ownership the right choice for you?
Understanding the resources you can access as well as the opportunities that exist can assist you in making that decision. Owning something of your own is exciting, but it takes certain skills, planning and resources to be successful.
This article focuses in on some of the financial resources you, as a veteran, can access to help you in your decision making process. This will begin a three part series of articles on Veterans starting their own business.
There are two valuable financials resources for veterans and their spouses to utilize for starting a business. They are the Patriot Express Loan Initiative and the Veterans Improvement Act of 2008.
The Patriot Express Loan Initiative
The new Patriot Express loan is offered by the Small Business Administration’s (sba.gov) network of participating lenders nationwide and features the SBA’s fastest turnaround time for loan approvals. Loans are available up to $500,000 and qualify for SBA’s maximum guaranty of up to 85 percent dependent on loan amount.
Patriot Express loans feature SBA’s lowest interest rates for business loans, generally 2.25 percent to 4.75 percent over prime depending upon the size and maturity of the loan. Your local SBA district office will have a listing of Patriot Express lenders in your area.
For example, a $100,000 loan for 6 years at the maximum SBA Express interest rate of 4.5 percent over prime would total approximately $128,004 at maturity. That would equate to about a $1777.84 per month payment today (Prime at 4% + 4.5% SBA interest rate). The same loan for the same term under Patriot Express would be limited to 2.25 percent over prime providing savings of almost $7828 over six years to the borrower or a monthly payment of $1669.12.
The Patriot Express loan can be used for most business purposes, including start-up, expansion, equipment purchases, working capital, inventory or business-occupied real-estate purchases.
About 15 percent of veterans are self-employed and about the same percentage of small business owners are veterans. When you consider that half of the nation’s non-farm GDP comes from small businesses and that small business accounts for two-thirds of new jobs, the drive and persistence of veterans are making a huge contribution to the strength of the US economy.
SBA has been active on many fronts to support America’s veterans. Through their resource partners – the Small Business Development Centers, SCORE and Veteran’ Business Outreach Centers – have targeted veterans, service-disabled veterans and Reservists in their counseling programs. SBA offers low-interest, long term disaster loans to small businesses owned by activated reservists and those that employ reservists. SBA guarantees approximately 8,000 veterans’ business loans totaling more than $1 billion annually.
Veterans, active duty personnel who are in the military’s Transition Assistance Program, and all Reservists and National Guard members, are eligible for Patriot Express. In addition, the spouse of any of the above communities, or the widowed spouse of a service member who died while in the service, or of a service-connected disability, are also eligible to participate in Patriot Express.
For more information or to find a local SBA office, go to http://www.sba.gov/.
Veterans Improvement Act of 2008
Veterans Improvement Act of 2008 was passed on September 21, 2008. Under section 325, veterans participating in on-the-job training for self-employment or operation of a franchise would no longer be required to certify to VA that they are being paid for the training and that the training will lead to employment. Because self-employment and franchise training are typically unpaid, veterans pursuing those goals who are otherwise eligible to receive payments for training are effectively excluded under current law.
The Congressional Budget Office estimates that under section 325 an additional 400 veterans annually would qualify for on-the-job training benefits during their training period. For a typical training period of five weeks, veterans would receive around $1,600 in 2009 and that amount would increase by a cost-of–living adjustment each year. In total, CBO estimates that enacting section 325 would increase direct spending by $7 million over 2009-2018.
Business ownership is an exciting opportunity and you have benefits as a veteran to help get you started. Be sure to look for part two in next month’s newsletter which will focus on special veteran programs offered by franchisors to incent you to start a business.
Series 1 of 3
Owning your own business can be an exciting opportunity versus working directly for an employer. But, is business ownership the right choice for you?
Understanding the resources you can access as well as the opportunities that exist can assist you in making that decision. Owning something of your own is exciting, but it takes certain skills, planning and resources to be successful.
This article focuses in on some of the financial resources you, as a veteran, can access to help you in your decision making process. This will begin a three part series of articles on Veterans starting their own business.
There are two valuable financials resources for veterans and their spouses to utilize for starting a business. They are the Patriot Express Loan Initiative and the Veterans Improvement Act of 2008.
The Patriot Express Loan Initiative
The new Patriot Express loan is offered by the Small Business Administration’s (sba.gov) network of participating lenders nationwide and features the SBA’s fastest turnaround time for loan approvals. Loans are available up to $500,000 and qualify for SBA’s maximum guaranty of up to 85 percent dependent on loan amount.
Patriot Express loans feature SBA’s lowest interest rates for business loans, generally 2.25 percent to 4.75 percent over prime depending upon the size and maturity of the loan. Your local SBA district office will have a listing of Patriot Express lenders in your area.
For example, a $100,000 loan for 6 years at the maximum SBA Express interest rate of 4.5 percent over prime would total approximately $128,004 at maturity. That would equate to about a $1777.84 per month payment today (Prime at 4% + 4.5% SBA interest rate). The same loan for the same term under Patriot Express would be limited to 2.25 percent over prime providing savings of almost $7828 over six years to the borrower or a monthly payment of $1669.12.
The Patriot Express loan can be used for most business purposes, including start-up, expansion, equipment purchases, working capital, inventory or business-occupied real-estate purchases.
About 15 percent of veterans are self-employed and about the same percentage of small business owners are veterans. When you consider that half of the nation’s non-farm GDP comes from small businesses and that small business accounts for two-thirds of new jobs, the drive and persistence of veterans are making a huge contribution to the strength of the US economy.
SBA has been active on many fronts to support America’s veterans. Through their resource partners – the Small Business Development Centers, SCORE and Veteran’ Business Outreach Centers – have targeted veterans, service-disabled veterans and Reservists in their counseling programs. SBA offers low-interest, long term disaster loans to small businesses owned by activated reservists and those that employ reservists. SBA guarantees approximately 8,000 veterans’ business loans totaling more than $1 billion annually.
Veterans, active duty personnel who are in the military’s Transition Assistance Program, and all Reservists and National Guard members, are eligible for Patriot Express. In addition, the spouse of any of the above communities, or the widowed spouse of a service member who died while in the service, or of a service-connected disability, are also eligible to participate in Patriot Express.
For more information or to find a local SBA office, go to http://www.sba.gov/.
Veterans Improvement Act of 2008
Veterans Improvement Act of 2008 was passed on September 21, 2008. Under section 325, veterans participating in on-the-job training for self-employment or operation of a franchise would no longer be required to certify to VA that they are being paid for the training and that the training will lead to employment. Because self-employment and franchise training are typically unpaid, veterans pursuing those goals who are otherwise eligible to receive payments for training are effectively excluded under current law.
The Congressional Budget Office estimates that under section 325 an additional 400 veterans annually would qualify for on-the-job training benefits during their training period. For a typical training period of five weeks, veterans would receive around $1,600 in 2009 and that amount would increase by a cost-of–living adjustment each year. In total, CBO estimates that enacting section 325 would increase direct spending by $7 million over 2009-2018.
Business ownership is an exciting opportunity and you have benefits as a veteran to help get you started. Be sure to look for part two in next month’s newsletter which will focus on special veteran programs offered by franchisors to incent you to start a business.
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