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ENTREPRENEUR — Thank You for Your Service –
4 Business Funding Programs for Veterans
By Kedma Ough
September 24, 2014
There are more than 2.4 million businesses operated by veterans nationwide, according to the SBA 2012 Veterans Report. Despite this growing trend towards entrepreneurship, funding options that specifically benefit veterans are difficult to find. Here are four unique funding programs if you are a veteran starting or expanding your business.
1. Self-employment grants for service-disabled veterans. Service-disabled veterans can connect with a self-employment program offered through the United States Veterans Administration.
Participants are required to submit a feasible and complete business plan for any funding considerations. As part of the process, veterans are assigned to either Category I or Category II. Those categories determine the level of self-employment funding may be available.
Veterans designated Category I have the most serve service-connected disabilities and self-employment is considered a viable option. Category II is designated for veterans with serious employment challenges but not considered severe.
Depending on the category, veterans can obtain a grant to fund purchase of equipment, inventory, supplies, training, licensing fees and marketing. Veterans interested in the program can contact their local VA office where a counselor will help them qualify for the self-employment program. Funds allocated for start-up enterprises are grants that do not have to repaid.
2. Angel investment group supporting veterans. Hivers and Strivers is an angel investment group funding early-stage investments in start-up companies founded and run by graduates of the U.S. military academies. The company generally invests $250,000 to $1 million in a single round.
A company seeking larger rounds can actively look to other investor groups in the Hivers and Strivers network for additional funds. Their goal is to support veteran entrepreneurs through a successful exit with a return 10 times the initial investment. Veterans can learn more about Hivers and Strivers and complete an application available on the front page of the company website.
3. Venture capital fund serving veterans. The Veterans’ Opportunity Fund (VOF) is the first venture capital fund formed to invest in businesses that are started, owned and/or managed by veterans of the United States armed forces. The investments range up to $3 million.
The fund focuses on companies based on the East Coast. The industries of interest include technology, healthcare, business services,and specialty manufacturing. The stage of interest is at early revenue or after a product or service can be evaluated.
Veterans interested in pursuing an opportunity with VOF can submit a business plan directly through the company website.
4. Online lending platform for veterans. Street Shares is an online lending platform designed to connect investors and small business owners to support veterans starting or expanding their business. Veteran-owned businesses can apply online in about 10 minutes.
The online auction periods have ranged from five to 30 days. Business owners pitch directly to lenders for loans of $5,000 to $50,000 with one, three, of five-year terms. Accredited investors can fund any portion of up to 90 percent of the requested loan amount with bids as low as $25 per business. StreetShares takes the first 10 percent. Co-founder Mark Rockefeller describes the platform as “‘Shark Tank’ meets eBay.”
While each of these programs follows standard due diligence in their funding, their social-driven goals include increasing the number of veteran-owned businesses nationwide.
We help businesses grow, hire & train workers, and reduce costs.
Mass BizWorks is a business solution designed by the Commonwealth to help Massachusetts businesses meet their business needs. Mass BizWorks pulls all the business incentives and services offered by the federal and state government into one place ‒ so there’s no confusion about what services are available and which agencies to contact.
Eligible Massachusetts businesses regardless of size or industry can access these money-saving services and more:
- Up to $250,000 to upgrade the skills of your current workforce
- Up to $75,000 per year for hiring and training new workers
- Up to $25,000 for workplace safety training
- Tax incentives for business expansion
- Reimbursement of wages for training new workers
- Free consulting services to help your business grow and innovate
- Layoff aversion
So, are you ready to get an edge in your business? To learn more about Mass BizWorks or to schedule an appointment–go to www.mass.gov/bizworks or call 800-252-1591. Mass BizWorks representatives will work closely with you to get you started.
Small Business Innovation Research (SBIR) Program
The Small Business Innovation Research (SBIR) program encourages small businesses to advance their technical potential from funds committed by federal agencies with large extramural research and development budgets. The SBIR program serves to fund the critical startup and development stages for a technology and encourages commercialization of the technology, product or service.
The goals of the SBIR Program include fostering innovation, using small business to meet federal research and development needs, enhancing private-sector commercialization of innovation, and increasing women, minority and veteran participation in technology innovation. The program has provided early funding for technology companies such as Qualcomm, Symantec, and Genentech.
In the current economic environment, in which start-up companies are having difficulty accessing capital, the SBIR program is more important than ever. Last year, the SBIR program distributed approximately $2.5 billion in funding to small businesses, while the entire venture capital industry only put $1.7 billion into early-stage investments. The program is specifically designed to fund research and development projects that private sector investors may deem too early or too risky.
The SBIR Program is structured in three phases:
- Phase I is a feasibility study. It is a proof of concept award typically up to $150,000 with a $225,000 maximum.
- Phase II is usually a prototype development award typically up to $1M with a $1.5M maximum.
- Phase III is for the small business to pursue commercialization objectives resulting from the Phase I/II R/R&D activities. The SBIR program does not fund Phase III. Phase III may involve follow-on non-SBIR funded R&D or production contracts for products, processes or services intended for use by the U.S. Government.
Which Federal Agencies participate in the SBIR Program?
Each year, Federal agencies with external R&D budgets that exceed $100 million are required to allocate a certain percentage of their R&D budget to the SBIR program. Currently, eleven Federal agencies participate in the program:
- Department of Agriculture
- Department of Commerce – National Institute of Standards and Technology
- Department of Commerce – National Oceanic and Atmospheric Administration
- Department of Defense
- Department of Education
- Department of Energy
- Department of Health and Human Services
- Department of Homeland Security
- Department of Transportation
- Environmental Protection Agency
- National Aeronautics and Space Administration
- National Science Foundation
The agencies designate R&D topics in their solicitations and accept proposals from small businesses. Awards are made on a competitive basis after proposal evaluation.
More information can be found at: https://www.sbir.gov/#