New Jersey veteran small business owners and entrepreneurs benefited from a total of $17 million in loan approvals from the U.S. Small Business Administration’s (SBA) New Jersey district office during the agency’s Fiscal Year 2019 the period from October 1, 2018 thru September 30, 2019.
According to SBA New Jersey District Director Al Titone, there were 45 loan approvals spread out over 17 of the 21 counties throughout the state. The average SBA loan for a veteran in New Jersey was $377,777 and helped to create or retain over 240 jobs.
Nationally, the SBA approved $984 million to over 2,600 veterans in FY 2019. This accounted for 3.5 percent of the $28.1 billion of the agency’s dollar volume and 4.5 percent of the 58,000 loan approvals.
“The most recent federal data available shows veterans own more than two and a half million businesses – or nine percent of all U.S. companies,” said Titone. “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.”
Titone cited two New Jersey veteran-owned businesses that benefited, this past year, from SBA financing. James Jamerson, an army veteran and owner of Musikraft, an Atlantic County-based business that manufactures guitar necks and guitar bodies for the likes of Aerosmith and Lynyrd Skynyrd, used an SBA 504 loan of $198,000 from Regional Business Assistance Corporation and Capital Bank of New Jersey to purchase a 7,500 square facility that will allow the company to expand production, hire three new employees and add a showroom to display its products.
“The great part of this story is that this company previously was leasing a 5,000 square foot facility, but now thanks to an SBA 504 loan, the owner has a building that he can call his own,” said Titone.
Another veteran-owned business that secured financing from the SBA was Waltron, a Flemington-based company that was established in 1903 and provides its customers with water quality instruments that the company manufactures, as well as reagents and standards for all its products.
Through Provident Bank, Waltron’s President and CEO Jon Guy, a West Point graduate and army veteran was able to secure a $125,000 SBA-backed 7(a) Guarantee Loan for working capital in FY 2019, needed to support growth and seasonal business at end of last year.
Although Waltron has been in business for 116 years, the company has also utilized an SBA term loan and line of credit from Provident Bank in 2016 to support growth and new product development. “Provident Bank has been extremely supportive of us going back to our initial meeting in late 2015,” said Guy. “We would not have been able to achieve our recent growth and market success had it not been for their SBA lending team.”
“SBA continues to support established and new businesses in the veteran community like Musikraft and Waltron,” said Titone. “This past year out of the 45 veteran-owned businesses we provided financing to, 28 were existing businesses and 17 were new businesses.”
SBA lenders that made two or more SBA loans included TD Bank with 11 loans for $375,000; 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.
The top New Jersey Counties for SBA veteran loan approvals were Burlington County with 5 loans for $4.7 million; Essex County with 5 loans for $300,000; Ocean County with 4 loans for $3.1 million; Gloucester County with 4 loans for $705,000; Union County with 4 loans for $305,000; and Camden County with $5.1 million.
Despite the positive impact that veteran small business owners have on the economy, a 2018 report prepared by the SBA and the Federal Reserve Bank of New York reveals that veteran-owned businesses face greater difficulty in accessing capital relative to nonveteran-owned businesses.
Results from the Federal Reserve Banks’ Small Business Credit Survey (SBCS) showed that 60 percent of veteran-owned businesses reported a financing shortfall (obtaining less financing than requested), compared to 52 percent of nonveteran-owned businesses.
The report also cited three factors as to why veterans may face difficulties securing capital:
Lower amounts sought/possible lender mismatch – A greater share of veteran business owners reported seeking $100K or less in financing compared to nonveteran business owners. It can be more costly for larger lending sources (i.e. banks) to process smaller loans due to fixed transaction costs. As such, larger lenders tend to be less likely to approve smaller loans.
Low credit scores/insufficient credit history—Veteran business owners reported lower credit scores on average and a greater rate of credit denial due to insufficient credit history and collateral. These findings are in line with the notion that the frequent moves and overseas travel associated with military life can hinder veterans’ opportunities for building credit compared to nonveterans, but may not be indicative of their level of financial responsibility.
Need to seek out help—Veteran business owners submitted more loan applications and had lower approval rates. Observations by SBA officials, who often see veterans after they have already attempted and failed to obtain business financing, indicate that business owners may lack understanding of or preparation for the loan application process. Those who seek mentorship and understand the credit and collateral requirements could be better able to put successful applications together after the fact.
“We know that veterans possess the exact qualities that make successful entrepreneurs: discipline, determination, resourcefulness and dedication to team success. As Veterans Day approaches, the SBA celebrates the countless contributions of veteran-owned small businesses to our economy and strives to connect them, their spouses and active service members with no- and low-cost resources to help them succeed,” said SBA Atlantic Regional Administrator Steve Bulger who oversees the federal agency’s operations throughout New Jersey, New York, Puerto Rico and the U.S. Virgin Islands.
“There is no question that more resources are now available to veterans, active duty and military families than ever before. 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 and plant the seeds of entrepreneurship before those enlisted separate from the military. Our Boots to Business and Boots to Business Reboot programs are allowing us to offer veterans more substantial training programs, while our Veteran Business Outreach Center now has a much more visible presence here in New Jersey to help and mentor veterans. We are always looking for ways to do more for those who have served,” he added.
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