Report: Veteran-Owned Small Businesses Face More Financing Challenges than Non-Veteran Small Businesses
WASHINGTON – The Federal Reserve Bank of New York and the U.S. Small Business Administration today issued the report Financing their Future: Veteran Entrepreneurs and Capital Access.
The report provides a comprehensive look at the state of entrepreneurship for military veterans, while presenting new small business credit data from the Federal Reserve Banks’ 2017 Small Business Credit Survey (SBCS).
“Clearly, aspiring veteran entrepreneurs can benefit from preparation and training to start their businesses and succeed in the marketplace,” said Larry Stubblefield, Associate Administrator of the SBA’s Office of Veterans Business Development. “This report highlights the value of SBA-partnered resources like the Boots to Business entrepreneurship training program, which helps veterans as they navigate the challenges in financing, starting and growing their companies.”
“To solve a problem, it’s critical first to understand its scope. This report presents the most substantial evidence to date of the challenges veteran-owned businesses face in accessing capital,” said Claire Kramer Mills, New York Fed assistant vice president. “By understanding how much credit veteran-owned businesses are seeking, where they’re applying, and the nature of their financing challenges, policy makers and service providers can better help veterans overcome financing shortfalls.”
The report found that:
- Despite similar demand for financing, veteran-owned small business applicants were more likely than non-veteran-owned small business applicants to experience “financing shortfalls,” where they received less than the amount of credit they sought.
- They have lower approval rates at the most popular lenders, and the amount of SBA-guaranteed loans they have received has increased more slowly over time than for non-veterans.
- This discrepancy in financing experiences could be attributable to the smaller loan amounts that veteran-owned businesses seek, higher credit risk, and lack of information.
To further the research on small business financing, business owners are invited to participate in the 2018 Small Business Credit Survey.
Go to the report for more on key findings and conclusions.