En español | For many of the nation's 21.2 million veteran-owned small businesses, the financial strain from the coronavirus pandemic increases with each passing day. But the veterans say the skills they developed during their service have taught them how to handle the unexpected.
According to a recent study by the Small Business Administration (SBA), former service members are 45 percent more likely to own small businesses than nonveterans, indicating that military duty often bolsters self-employment.
"I was in multiple combat deployments between assignments in over 35 years. I became comfortable with risk and ambiguity. I think that's a key component for an entrepreneur, is to be able to understand that there are things beyond your control.” said retired Army Maj. Gen. Allen Batschelet, principal and cofounder of Horizon Strategies, based in Omaha, Nebraska.
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With the pandemic, his business has had to scale back its operations of providing leadership development and training, strategic planning consulting and operational planning expertise to academia and the defense sector.
"When you're in combat or deployed, you're constantly fighting to turn assumptions into facts. That has been a real advantage, to know how to do that,” said Batschelet, 59. “We don't want to make emotional decisions based on things we don't know."
So far, he hasn't had to lay off any of his 38 full-time and 100 part-time employees. The company, nearing its financial limit, did apply for the Paycheck Protection Program (PPP), which gives small businesses loans for payroll, utilities, and mortgage or rent costs.
For struggling small businesses across the country, the PPP program can be a means to pay employees and remain afloat. But its first round of funding quickly ran out, leaving many business owners empty-handed. The program has received a second round of funding, and that money is expected to go quickly, too.
"Many [small-business owners] are fearful about both the short- and long-term effects of the pandemic,” said Brad Sporrer, president of the Iowa Trust and Savings Bank in Clive. “PPP helps them for eight weeks, but a lot of our borrowers have virtually no revenue coming in, depending on their industry. So, they're fearful about their future prospects. This is kind of a stopgap effort to keep things going for a while.”
SBA benefits specifically for veterans
Veterans Business Outreach Center (VBOC): Military or veteran entrepreneurs looking for support can reach out to one of the 22 VBOCs. They provide counseling and mentorship, access to capital resources and entrepreneurial workshops, among other services. You can find a VBOC near you.
Boots to Business: For those interested in entrepreneurial education and training programs, virtual options are available with subject-matter experts and business advisers. These counselors are “fully armed with the tools to guide military entrepreneurs through the fundamentals of business ownership online,” the SBA said. Those interested in federal procurement can visit the SBA's Office of Veterans Business Development.
Government Contracted Small Businesses: Military or veteran-owned small businesses involved in government contracting or businesses affected by the coronavirus pandemic to the point where they are unable to complete performance of a federally awarded government contract should contact their contracting officer as soon as possible to discuss options available. Subcontractors should communicate any issues or concerns with their prime contracting officer. An SBA Procurement Center representative is an additional resource to address questions regarding COVID-19-related impacts on your contract. A representative can be found on the SBA's website.
Rich Holladay, 50, was a command sergeant major with the U.S. Army who picked up scuba diving as a hobby. He and his business partner, Cecil Stout, 64, a retired Marine, decided to create their own business, Waterdogs Scuba and Safety. It provides scuba instruction and equipment sales, rental and repair out of Clarksville, Tennessee.
The pandemic forced the company to cease most of its operations except for offering scuba classes and CPR training for health care professionals over Zoom calls. “This is really hard,” Holladay said. “We don't know what the future holds. In the meantime, we're cutting costs where we can, to continue to operate to the best of our ability. But it's an uncertain future for everybody."
He has several part-time employees, and the six full-time staff members that run the shop “are dependent on us for their employment."
Holladay and Stout applied for an Economic Injury Disaster Loan from the Small Business Administration and a PPP loan. However, though they turned in the application paperwork early, the PPP ran out of money before Waterdogs received any funds.
Serving in the military “helped us to adapt and understand that while you may want reality one way, reality is reality and you've got to cope with it the best that you can. In the military you do that on a daily basis,” Holladay said.
What the PPP application process is like
Since Holladay applied for the PPP loan, it has been replenished with additional funds. Business owners who are seeking help should apply quickly and remain organized.
To be eligible for a PPP loan, businesses are required to have been operating as of Feb. 15 and have no more than 500 employees. Borrowers can request 250 percent of their monthly payroll costs.
Erika Smith, a former dentist who runs D2D Health Management, a doctor-to-doctor consulting firm, helped the veteran-owned Extensive Pain Primary and Urgent Care Center of Nevada file its PPP application. She recommends borrowers first visit the SBA lender finder because not all banks are participating in the program. In many cases, she has found that participating banks prefer for their PPP borrowers to be preexisting customers.
Next, review the borrower application form to know what information needs to be provided. “You can already have that information gathered. So, when you're actually filling out the real thing online, you have your numbers, you know what's going on,” Smith said.
If the company has not filed 2019 tax returns, the SBA will accept a copy of 2018 tax documents. Additionally, it is important to have salary information of employees outlined in a document such as a QuickBooks file. W3 and 940 tax forms may also be required to identify how many people are employed and what they are paid, Sporrer said.
"It's very important to know that going in, so you can get those documents right. Therefore, when you're applying it makes it smooth and easy,” said Smith.
One common mistake applicants make is to list the number of employees they currently have but not the number they had before laying some off, said Andre’ Haynes, founder of the Armed Forces Chamber of Commerce in Las Vegas.
"Because of the error, they're going to receive less money and not be able to fully fund or support all of the employees under a normal circumstance,” he said.
Once approved by the SBA, the borrower has 10 days to close the loan. Then, when funds are received, it is important to keep track of how they're spent.
"As long as 75 percent of the money that you received from the loan went to your payroll, that can determine if it will be a grant or if you have to pay the loan back,” Smith said. “Twenty-five percent of that money can go to rent and utilities."
In response to criticisms that large companies received PPP loans before smaller ones, the SBA said it will review all loans in excess of $2 million “to further ensure PPP loans are limited to eligible borrowers.”