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Understanding Set-Asides

By Debbie Gregory.

Every year, the federal government spends approximately $500 billion on goods and services. In order to keep a level playing field, the Small Business Administration (SBA) has worked with federal agencies to ensure that at least 23 percent of all prime government contracts are awarded to small businesses. These are called “set-asides.”

In addition to the 23 percent for small businesses, statutory goals established by Congress for federal executive agencies are:

  • 5 percent for women-owned small businesses
  • 5 percent for Small Disadvantaged Businesses
  • 3 percent for HUBZone small businesses
  • 3 percent for service-disabled veteran-owned small businesses

There are two kinds of set-aside contracts: competitive set-asides and sole-source set-asides.

According to the SBA, in competitive set-asides, when at least two small businesses could perform the work or provide the products being purchased, the government sets aside the contract exclusively for small businesses. With few exceptions, this happens automatically for all government contracts under $150,000.

Sole-source contracts are a kind of contract that can be issued without a competitive bidding process. This usually happens in situations where only a single business can fulfill the requirements of a contract.

Veterans are uniquely qualified to secure government contracts due to the skills and experience inherit from their career in the military. The federal government tries to award at least three percent of annual federal contracting dollars to service-disabled veteran-owned small businesses.

Working with veteran owned businesses have additional advantages: many of their owners already have the necessary security clearances often required for government contracts. They also have knowledge of the inner workings of government.

The certification process varies depending on the SBA contracting program. For some, you can self-certify just by updating your business profile in the System for Award Management (SAM) at http:www.sam.gov.

For other programs, you have to apply for certification. As part of the application, you’ll answer questions about your business and its ownership, and upload supporting documents.


According to the most recent census data, there are 2.45 million veteran-owned businesses in the U.S. Veteran entrepreneurs contribute to the economy through their businesses and their willingness to hire veterans.
There are a number of funding resources available to veterans in order to get their business off the ground, or expand an existing business.
• The Office of Veterans Business Development, through the Small Business Administration (SBA) supports new and existing veteran entrepreneurs and military spouses. The program offers a variety of training and financial services. The SBA Veterans Advantage Guaranteed Loans program offers loans of $150,000 or less with no guaranty fee. Larger loans carry a low guarantee fee. SBA Express Loans have no upfront borrower fee for eligible veterans and military spouses on loans up to $35,000. Leveraging Information and Networks to Access Capital matches businesses with SBA-approved non-profit lenders. The 7(a) Loan Program is the SBA’s most common loan program, and includes financial help for businesses with special requirements.
• The Department of Veteran Affairs is a great starting point when looking for financing, and has created the Veteran Entrepreneur Portal (VEP), which can help you quickly identify financing resources for your business.
• The Military Reservist Economic Injury Disaster Loan provide funds to eligible small businesses to meet necessary operating expenses that it could have met, but is unable to meet, because an owner/essential employee was “called-up” to active duty.
• The USDA Veteran and Minority Farmer Grant, run by the Department of Agriculture, aims to bring traditionally underserved people into farming through training and technical and financial assistance.
• The VetFran(R) program is designed to help veterans start their own business. While these aren’t traditional business loans for veterans, the program offers financial incentive for veterans to launch a franchise.
In addition to lending resources, don’t discount the value of networking resources. Who better to share advice than those who have walked the path before you?
• American Corporate Partners links veteran entrepreneurs with successful businesspeople for training and mentorship.
• National Veteran-Owned Business Association presents you with a great networking opportunity and the chance to learn much more about running a business.
• SCORE Foundation Veteran Fast Launch Initiative offers advertising, marketing and business mentoring, all at no cost.

• Syracuse University’s Institute for Veterans and Military Families provides entrepreneurial training. Their Entrepreneurial Bootcamp for Veterans program is free for post-9/11 veterans.
• Veterans Business Resource Center provides business consulting and mentoring.
• Veterans Business Services can assist in obtaining capital for your business.

portal

By Debbie Gregory.

Many U.S. military veterans leave their service branch with skills and attributes necessary to succeed as veteran business owners.

Often times, the main roadblock for these entrepreneurs is financing their new mission: to become a veteran business owner or a service disabled veteran business owner.

If you’re looking to start or expand your business, there are a number of financing options available.

Start with the Department of Veterans Affairs’ Veteran Entrepreneur Portal.  The website features all things related to veteran entrepreneurship, including a customized wizard that will identify financing resources to support the start-up, development, or growth of veteran owned small businesses.

The U.S. Small Business Administration created the Military Reservist Economic Injury Disaster Loan to offer very low-interest loans to help reservists rebuild their businesses after serving their country. Reservists who are also business owners have to balance those two responsibilities in addition to their families. This loan is limited to businesses that the SBA determines would be unable to recover without government assistance.

Another SBA program designed to serve a particular subsection military veterans is the Service Disabled Veteran Owned Small Business Program. Veterans with a service-connected disability who are principal owners of a small business may be connected with sole-source government contracts of up to $5 million.

StreetShares offers a loan platform where investors compete in an online auction format to fund different portions of an applicant’s business loans. The investor that offers the lowest interest rate “wins” the agreement.   StreetShares’ non-profit foundation has partnered with JP Morgan Chase to commit $10,000 per month in awards to eligible reserve or active-duty service members and military veteran small business owners. Three winners are chosen monthly to split a $10,000 prize based on the merits of their business plan and the potential impact of the business on the military and veterans communities.

Non-profit Accion Veteran-Owned Business Loans provides loans up to $1 million, depending on the business’ need. Accion is often able to fund loans for veteran business owners who may not be eligible for commercial loans.

sba

The U.S Small Business Administration (SBA) is looking to serve small business owners as they look for ways to access capital.

Earlier this year, the SBA implemented a new measure to help get small business loans into the hands of veterans.  To continue supporting America’s veterans, the SBA Veterans Advantage reduces the up-front guaranty fee from 3% to 0% for SBA Express loans over $150,000 approved to small businesses owned by qualified veterans.

The SBA has implemented this measure in order to encourage greater participation in SBA lending programs with a direct benefit to veteran-owned small businesses.

This measure set the borrower upfront fee to zero for all veteran loans authorized under the SBA Express program (up to $350,000) which accounts for 73 percent of these loans.  The initiative started on January 1st, and will continue through the end of the fiscal year.

This change makes loans more affordable for borrowers.

Again, this policy announcement means that under the SBA Express program, veteran borrowers will no longer have to pay any upfront fee for any loan up to $350,000.

SBA provides veterans access to business counseling and training, capital and business development opportunities through government contracts. In FY 2013, SBA supported $1.86 billion in loans for 3,094 veteran-owned small businesses.   And since 2009, the dollar amount of SBA lending support to veteran-owned firms has nearly doubled.

Businesses must be 51% or more owned and controlled by an individual or individuals in one or more of the following groups: Veterans (other than dishonorably discharged); Service-Disabled Veterans; Active Duty Military service member participating in the military’s Transition  Assistance Program (TAP); Reservists and National Guard Members; or the Current spouse of any Veteran, Active Duty service member, or any Reservist or National Guard member; or widowed spouse of a service member who died while in service or of a service-connected disability.

 

boots_to_business

By Debbie Gregory.

I must sound like a broken record when I say that the traits and skills our nation’s service members possess make them great entrepreneurs, and that military service is one of the leading indicators of entrepreneurial success. Now the U.S. Small Business Administration (SBA) backs this up with statistics that reveal veterans are 45% more likely to be entrepreneurs than non-veterans, and over 13% of veterans have been self-employed in recent years.

Part of that success might be due to the many resources available to help budding entrepreneurs start and run their small businesses, once they leave the military. In fact, over the last three years, more than 35,000 transitioning service members and military spouses have participated in the SBA’s Boots to Business entrepreneurship training program, presented in collaboration with Syracuse University’s Institute for Veterans and Military Families.

Since not every veteran has access to the Boots to Business program, here are some important tips to stay the course:

  1. Lean on your military skills, traits and experience. While in the military, your ability to lead, bounce back, and push through served you well. Likewise, these abilities will serve you well as a great entrepreneur or small business owner.
  1. Know the difference between an opportunity and an idea. While an opportunity could parlay into a business, an idea is more of a feeling or notion that could be fleeting and lead to a failed venture. Try to brainstorm with the people you trust will give you honest feedback, or pull together a focus group.
  1. Analyze the market. Is there a market need for what you are offering? Who will be your customers? Why will they be your customer vs. your competitors’?
  1. Know where to find funding, and be aware of all the financial risks. Will you be tapping friends and family, a bank loans, or outside investors? The SBA has numerous financial resources and SBA-guaranteed loans are an excellent form of funding for veteran startups. T
  1. Make sure you do a feasibility analysis to make sure you know whether or not small business ownership is right for you. A New Venture Feasibility Analysis Tool is available on the Boots to Business website here: http://boots2business.org/resources/
  1. Remember that your business, and ultimately your success, depends on YOU.
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