This post will explore business grants for Veterans to help them start and grow new enterprises. According to the research estimates, there are more than 20 million veterans living in the United States. When returning to civilian life, some Veterans get bitten by the entrepreneurial bug and start their own businesses. Of the approximately 29.6 million businesses in the United States, about 2.5 million are owned by veterans. You can find Veteran-owned businesses in every industry sector including manufacturing, consulting and service industries. Technology-related businesses are one of the fastest growing industry choices among Veteran entrepreneurs.
Interestingly, fewer military Veterans today are starting their own businesses than their predecessors from previous generations. For instance, the data shows that more 49 percent of World War II Veterans became small business owners and about 40 percent of Korean War Veterans launched their own business ventures.
Lack of Access to Capital is a Barrier
Among military Vets surveyed, many indicate that lack of access to financial resources, including business grants for Veterans, is one reason that fewer are starting their own businesses than in the past.
First, regardless of military service status, many banks are reluctant to fund startups and new businesses. It is often said that banks only loan to businesses and people that don’t need the money. For the military Veteran who has repeatedly been turned down for funding to launch his or her new business, this can appear to be the case. It’s also important to note that certain lending regulatory restrictions can make it more difficult for a military Vet to obtain a bank loan to launch a new business.
Other funding options to help Veterans start or grow a business include self-financing, loans or investments from friends and relatives, angel investors and venture capitalists and most recently, crowdfunding. According to the Institute for Veterans and Military Families, nearly 60 percent of military Veterans use personal or family savings (self-financing) to launch their new businesses.
Business Grants For Veterans
There is also another, often overlooked potential source of funding for veteran-owned startups and firms–business grants for Veterans. While the federal government does not provide directly provide business grants for Veterans to launch a startup or new venture, it does offer some grants to which veteran-owned firms might be eligible to apply. In fact, each year, the federal government awards approximately $5 billion in grants to for-profit businesses. However, it must be made clear that the majority of these grants are awarded to support research and development activities that support national priorities, mostly related to technology, energy, healthcare, education, public safety and criminal justice, among others.
When looking at business grants for Veterans, two programs come to mind—the Small Business Innovation Research (SBIR) program and the Small Business Technology Transfer (STTR) program.
About the SBIR and STTR Programs
The United States Small Business Administration (SBA) administers both the SBIR and STTR grant programs. Through these two competitive programs, the federal government ensures that the nation’s small, high-tech, innovative businesses are a significant part of the government’s research and development efforts. SBIRs and STTRs are designed to foster innovation and research while supporting small businesses. The ultimate goal of these programs is to help small businesses develop products that can be commercialized.
Approximately $2 billion is awarded to United States small businesses each year through these two grant programs. The two programs were developed out of the government’s recognition that smaller firms—including those owned by Veterans—are a great source of new innovation but that most of these firms often struggle for funding, especially for funds to pursue research and development projects.
Both the SBIR and STTR program share common traits. First, both programs are only available to for-profit, small businesses located in the United States and that physically perform their research and development activities in the U.S. In addition, both SBIR and STTR are applied for and funded in phases – Phase I is feasibility, Phase II allows further development and Phase III is commercialization. SBIR and STTR are set up as two unique programs, and there are some key differences between them. The main difference between the two is that the STTR program has a requirement that the project include a non-profit research institution as a research program collaborator, whereas the SBIR program does not. For both programs, Phase I funding can generally ranges from $50,000 to $150,000. Phase II grant awards can range from $500,000 to more than $1 million depending on the program.
Visit the SBIR website if you would like to learn more about both SBIR and STTR programs and to find out if there are any business grants for Veterans that are right for you. Another source to find small business grants for Veterans include www.grants.gov. You can also check with your state or local economic development office to see if they offer any grants for veteran-owned technology firms.
Besides business grants for Veterans, there are also a number of other resources available to support military Vets in their quest to launch a new venture or grow their existing businesses. These resources can help Vets access capital, find mentors, grow their networks and more.
- Department of Veterans Affairs: This website offers a host of business resources for Veteran-owned businesses and military Vets interested in starting their own businesses.
- Invoice Factoring: For military Vets who have already launched their businesses, accessing growth or operational capital can often be as challenging as securing funds to launch. Invoice factoring is a process through which the business sells open invoices to a factoring company in exchange for working capital. Some of the benefits of invoice factoring include quick access to capital and no requirement for a strong credit score. LendEDU has a great article on the ins and outs of invoice factoring.
- Small Business Administration: The SBA page has lots of information about various programs that offer support for Veterans as they enter the world of business ownership. Here you can find information about funding programs, training, and federal contracting opportunities.
- BusinessUSA: This government-operated website provides information for Veteran entrepreneurs to help them launch or grow a business, including loans backed by the government and funding programs.
- Angel Investors: Hivers and Strivers is an Angel Investment Group focusing on early stage investments to support start-up companies founded and run by graduates of the U.S. Military Academies.
- Founder Institute: The Founder Institute is one of the world’s leading pre-seed stage startup accelerators. FI has chapters in more than 170 cities around the globe and has special initiatives to support Veteran entrepreneurs. Most recently, Founder Institute has launched FI for Good, which is include as initiative specifically targeted to Veterans.
For a number of reasons, military Veterans are ideally-suited to the entrepreneurial life. Overall, they tend to be disciplined and persistent, while also demonstrating strong leadership qualities. All of these are qualities critical to achieving entrepreneurial success.
Interested in learning more about business grants for Veterans or other resources to help you launch and grow your startup or business venture? Contact me today and let’s talk!