Running a veteran-owned small business has its advantages. Still, you must undergo a certification process before you can enjoy those benefits.
Let's discuss the small business programs and their associated regulations to give you an idea of your options as a veteran business owner.
A Veteran-Owned Small Business (VOSB) represents a separate class of business as defined by the Office of Veterans Business Development.
To qualify as a veteran-owned business, you first need a small business, which is no different for a veteran entrepreneur than any other business owner. The Code of Federal Regulations determines the maximum number of employees or annual receipts allowed in a small business.
Previously, you were only considered eligible if you met the requirements in your primary North American Industry Classification System, but that changed recently. Now, you only have to meet those standards for any category you’re currently conducting business in.
Since January 2023, you can no longer self-certify through the Veterans Affairs Center for Verification and Evaluation. Instead, you must now certify at the U.S. Small Business Administration.
If you qualify, you’ll benefit from government-funded business training and have access to a pool of government contracts with limited competition. This can be especially helpful for service-disabled veteran-owned small business (SDVOSB) owners who can’t operate a full business alone.
As a veteran-owned small business owner, you’ll get access to property administered by the General Services Administration and the State Agency for Surplus Property, as well as a range of loan programs from the SBA.
Only some veteran business services are related to the government, so you'll find a lot of niche programs, business networks, and services by NGOs, angel investors, and private banks. The Hivers and Strivers angel investors, the Veteran Women’s Enterprise Center, and BunkerLabs are three examples. In some cases, you may even qualify for certain tax incentives.
Of course, running a veteran-owned small business enterprise also carries meaning for your customers and community. Making your veteran status and certification part of your brand can demonstrate your commitment to your country and society, leading to more business opportunities. Equally, dedicated networking events like the National Veterans Small Business Week allow you to connect with fellow veterans and find mentors.
While running a VOSB comes with perks, you must fulfill a range of requirements to get certified.
You must have been on active duty in one of the military branches to be considered a veteran. The same goes if you’ve served as a reservist or a member of the National Guard.
Further, a veteran (or several) must hold at least a 51 percent ownership stake to receive your business certification. An exception to this rule may only apply if you’re no longer capable of running the day-to-day operations of your business and have passed those responsibilities on to a spouse or an appointed caregiver.
Other than that, the regulations primarily measure your involvement in the business. Suppose someone else is the highest-paid person in the company. In that case, you need to explain in writing how your deliberate decision to take a lower pay helps your business. You're also supposed to work full-time.
To become certified as an SDVOSB, the disability must be linked to military activities, which means you possess a disability rating letter from Veterans Affairs or the Department of Defense.
You also cannot be debarred from federal contracting, or your business will be decertified. You may not be considered if you've been dishonorably discharged, in which case you can apply for a discharge upgrade or have your discharge reviewed.
Applications for both VOSB and SDVOSB run through the Department of Veterans Affairs, whereas the SBA only handles SDVOSB applications.
Starting a business presents challenges, especially when applying your skills to an ever-evolving business environment. Luckily, there's an array of available small business loans specifically tailored to military veterans.
If you've already applied for certification through the SBA, considering their Veterans Advantage Guaranteed Loan program is the next natural step. But there are other options than the federal government.
Whether you decide on the Street Shares Foundation’s grant program, Warrior Rising Small Business Grants, or the Boots to Business program, there are plenty of opportunities to find funding, training, and mentoring.
Here at Cathay Bank, we offer business lending options that may come with more flexible conditions and fewer requirements than other solutions.
Whichever path you choose, ensure it meets your needs and reflects your business goals. Entering the business world is always a big step, so evaluating your options is best before jumping right in.
This article does not constitute legal, accounting or other professional advice. Although the information contained herein is intended to be accurate, Cathay Bank does not assume liability for loss or damage due to reliance on such information.