The U.S. Small Business Administration and the Federal Reserve of New York
First published November 2018
For decades, military veterans have been a vital part of the nation’s business sector—leveraging the valuable skills they gained during their service to start businesses across the country. However, veteran entrepreneurship is facing a generational decline, with younger veterans owning businesses at lower rates compared to past generations. Furthermore, we are now beginning to see veterans owning businesses at lower rates compared to nonveterans.
Part of the US Small Business Administration’s mission is to facilitate a successful transition to civilian life for military veterans. Understanding the current state of veteran entrepreneurship, in particular, the type of challenges veterans face in starting and growing businesses is fundamental to fulfilling this responsibility. The US Small Business Administration’s Office of Veteran Business Development (OVBD) has partnered with the Federal Reserve Bank of New York to examine veteran business financing, which is critically tied to their performance and growth.
Of particular concern for policymakers is whether veterans have a more difficult time accessing capital than nonveteran business owners. In order to substantiate policy intervention on behalf of veteran entrepreneurs, it is necessary to size the market and understand the needs and challenges. While anecdotal evidence points to capital access challenges, systematic data collection has been limited. This paper first outlines the current literature on veteran entrepreneurship and then presents new small business credit data from the Federal Reserve Banks’ Small Business Credit Survey. The data, for the first time, provide substantial evidence that veteran-owned businesses face greater difficulty in accessing capital relative to nonveteran-owned businesses.