What GAO found
A GAO analysis of 2020 Annual Business Survey data found that the characteristics of veteran-owned small businesses were generally similar to those of non-veteran-owned small businesses. In both types, most companies had fewer than 10 employees and were located in urban areas. According to an analysis of GAO's small business credit reporting data, the most common challenges to accessing capital cited by veteran-owned businesses include long wait times for credit decisions, difficult application processes, and high interest rates. Ta.
The Small Business Administration (SBA) provides training and education in small business ownership through Veterans Business Assistance Centers operated by state and local agencies and other eligible organizations. The SBA requires centers to submit quarterly performance reports. GAO found that some reports did not include all necessary information, such as the number of counseling sessions. By developing procedures to ensure compliance with reporting requirements, the SBA will have better information to supervise centers.
The SBA facilitates access to capital for small business owners, including veterans, through three loan programs. The 7(a) program provides financing through commercial lenders, the 504 program provides financing for fixed assets (such as buildings and machinery), and the microloan program provides loans of up to $50,000 and technical assistance. Veteran-owned small businesses received about 2% to 5% of total loans in his three programs from fiscal years 2016 to 2021.
Percentage of Loans to Veterans in SBA's 7(a), 504, and Microloan Programs, Fiscal Years 2016-2021
SBA does not have policies or procedures in place to comply with select legal requirements regarding veterans. For example, the SBA's standard operating procedures did not explain what special consideration the SBA would provide to veterans in accordance with the Small Business Act and SBA's implementing regulations. The SBA also lacks reporting procedures to congressional committees and has been unable to demonstrate compliance in recent years. Establishing policies and procedures for these requirements will better ensure that the SBA is keeping Congress informed and providing special consideration to veterans as required by law.
Why GAO conducted this study
In 2020, approximately 6% of businesses with paid employees were veteran-owned businesses, but veteran entrepreneurs can face challenges in accessing small business capital. The Small Business Act authorizes certain SBA small business loan programs, requires SBA to provide special consideration to veterans, and authorizes SBA to establish veteran assistance programs.
GAO was asked to examine capital access to veteran-owned small businesses and the SBA's role in providing services to these businesses. This report (1) describes the characteristics of veteran-owned businesses and challenges in accessing capital, (2) examines SBA performance data on veteran assistance programs, and (3) examines veteran-owned businesses from 2016 to 2021. examines SBA loans to small businesses, and (4) evaluates SBA policies and procedures for complying with selected legal requirements regarding veterans. GAO examined national small business data and data on SBA policies, procedures, and loan programs, and also interviewed agency employees, 22 veterans outreach center directors, and 11 veterans who participated in SBA programs.