capital squeeze

Report reveals roadblocks for veteran entrepreneurs

Veteran-owned small businesses face more financing challenges compared with nonveterans.

“Financing Their Future: Veteran Entrepreneurs and Capital Access” was created by the Federal Reserve Bank of New York and the U.S. Small Business Administration.

Among the report’s findings:

  • Despite similar demand for financing, veteran-owned small business applicants were more likely than non-veteran-owned small business applicants to experience “financing shortfalls,” where they received less than the amount of credit they sought.
  • Veterans have lower approval rates at the most popular lenders, and the amount of SBA-guaranteed loans they have received has increased more slowly over time than for nonveterans.
  • This discrepancy in financing experiences could be attributable to the smaller loan amounts that veteran-owned businesses seek, higher credit risk and lack of information.

“To solve a problem, it’s critical first to understand its scope. This report presents the most substantial evidence to date of the challenges veteran-owned businesses face in accessing capital,” said Claire Kramer Mills, New York Fed assistant vice president. “By understanding how much credit veteran-owned businesses are seeking, where they’re applying, and the nature of their financing challenges, policy makers and service providers can better help veterans overcome financing shortfalls.”

The report also notes a generational decline in veteran business ownership, with fewer younger veterans taking the path of entrepreneurship. The rate of veterans who own businesses is now lower than the rate of non-veterans who own businesses.

In addition, for businesses that have one to four employees, veteran-owned businesses see 16 percent lower average sales per firm compared with non-veteran-owned companies.

To further the research on small business financing, business owners are invited to participate in the 2018 Small Business Credit Survey.



Veteran entrepreneurs who reported encountering challenges when starting and growing their businesses. The most common challenges reported were access to capital and access to networks and mentorships.


Veteran-owned businesses reporting obtaining less financing than requested, compared with 52 percent of nonveteran-owned businesses


Decrease in veterans reporting that they are self-employed in 2017 compared with 1998


Veteran-owned businesses deemed low credit risks, compared with 69% of nonveterans. According to the report, veterans’ overall higher credit risk status may be attributable to the challenges of building credit history and increasing credit score when frequently moving and living overseas.


Veteran-owned businesses deemed medium credit risks, compared with 24% for non-veterans


Veterans reporting that they are self-employed in 2017


Loan approval rates from the top three sources of credit—large banks, small banks and online lenders—were about 10 percent lower for veteran-owned businesses than for nonveteran-owned businesses.

Between 2010 and 2017, SBA-guaranteed loans increased by only 48 percent for veteran borrowers, compared with an increase of 82 percent for nonveteran borrowers.

According to SBA officials, many veteran entrepreneurs seek SBA assistance after they have attempted and failed to obtain business financing.

Source: “Financing Their Future: Veteran Entrepreneurs and Capital Access” report; figures from fiscal year 2017