While New Jersey veterans benefited from $17 million in SBA loan approvals during the last fiscal year, – Oct. 1, 2018 to Sept. 30, 2019 – according to the U.S. Small Business Administration’s New Jersey district office, a study from the SBA’s Office of Veteran Business Development and the Federal Reserve Bank of New York finds an overall decline in the number of veteran entrepreneurs nationally.
In New Jersey, an average loan size of $377,777 helped to foster 240 jobs with 45 approvals across 17 of the state’s 21 counties, according to SBA NJ District Director Al Titone.
TD Bank, which recently topped the state’s list of SBA lenders for fiscal year 2019, also led the pack for loans to veterans, making 11 for $375,000. Five other institutions in the state made two or more such loans: M&T Bank with 6 loans for $570,200; The Bancorp Bank with 2 loans for $3.9 million; Provident Bank with 2 loans for $550,000; Newtek Small Business Finance with 2 loans for $400,000; and Fulton Bank with 2 loans for $175,000.
Veterans in Burlington and Essex counties saw the most loan approvals – five each – with the former’s totaling $4.7 million and the latter’s $300,000.
“There is no question that more resources are now available to veterans, active duty and military families than ever before,” SBA Atlantic Regional Administrator Steve Bulger said in a prepared statement. “SBA’s strategy to engage and work with veterans as they begin to transition from the military to civilian life is a huge change in the agency’s approach. Instead of waiting for veterans to come to us, we now provide training on military bases [through its Boots to Business and Business Reboot programs, in addition to the Veteran Business Outreach Center] and plant the seeds of entrepreneurship before those enlisted separate from the military.”
Across the country, $984 million was handed out to more than 2,600 veterans during fiscal year 2019; 3.5 percent of the SBA’s $28.1 billion agency dollar volume and 4.5 percent of its 58,000 total loan approvals, according to the SBA.
“The most recent federal data available shows veterans own more than two and a half million businesses – or 9 percent of all U.S. companies,” Titone said in a prepared statement. “Veteran-owned firms employ more than five million people with an annual payroll of $195 billion while generating more than $1.1 trillion in receipts for our economy.”
The Financing Their Future: Veteran Entrepreneurs and Capital Access report from the Office of Veteran Business Development and the Federal Reserve Bank of NY highlighted three hurdles unique to veterans accessing capital.
According to the report, more veterans sought loans for $100,000 or less, compared with non-veteran business owners. These small values can be costlier for lending sources due to fixed transaction costs, leading to a less likely chance for approval, the report said. Veterans, too, encountered difficulties due to lower credit scores or insufficient credit history (even though the results are not necessarily indicative of financial responsibility, but could be due to frequent moves and travel abroad).
Finally, veterans seemed to require additional assistance to prepare and understand the loan application process. The report showed demand was similar between veteran and nonveteran business owners – 42 percent versus 40 percent for the prior 12 months – however, 60 percent of veteran-owned businesses reported experiencing a shortfall in financing, compared to 52 percent of nonveteran owners.