VA Provides Clarity for Self-Employment Plans Including A Veteran Franchise Business
Late in 2013 the Veterans Administration (VA) issued revised procedures to clearly define when it is appropriate to authorize a self-employment plan, and what services should be included in the plan. Franchisees may be approved if they are endorsed as part of a viability analysis of a proposed self-employment business plan for a Service Disabled Veteran (SDV).
Before an SDV begins the new process he/she must determine whether they meet eligibility requirements. The biggest question is, “Are you within the time limit for receiving this benefit?” This is generally 12 years from the date the VA notified you that you had at least a 10 percent service-connected disability. You can apply online by filling out the application; it only takes about 15 minutes. If you qualify, be sure to tell your assigned counselor that you are interested in exploring the Vocational Rehabilitation and Employment (VR&E) Track 3 for “Self-Employment.” Some subsistence living expenses may be available during the self-employment business plan development period.
Veteran Business Services (VBS) has devised a Franchise Accelerator which was approved by VR&E and is featured on the VA’s Portal for Veteran Franchise Opportunities. There are also other resources listed on the Portal to help explore the franchise industry
After you’re approved, the new VR&E policy and procedures will be applied. This includes attending an initial self-employment orientation, a preliminary self-employment evaluation, and then finally VR&E Category assignment, which affects the level of benefit you can receive.
New Fast Track planning should greatly improve the process. What this can mean is that a Veteran who is deemed qualified for VR&E can explore potential resources available through VR&E for a franchise before developing complex business and financing plans necessary for his/her eventual business launch. However, the Fast Track plan for an SDV considering self-employment will include a future objective on the development and submission of a viable business plan. This objective would also require completion of an introductory course that helps determine if franchise self-employment is appropriate. A recent collaboration between the USO and Georgetown University would most likely satisfy the requirement for a franchise self-employment plan.
The new VR&E procedures were developed to assist Vocational Rehabilitation Counselors (VRC) to determine if self-employment is truly feasible and what services are needed for the Veteran to be successful in starting his/her own business. In addition, the VRC must determine if a Veteran with a service-connected disability qualifies for a Category I or Category II designation under the Program. Both Categories offer comprehensive training in the vocational goal and at least incidental training in the management of a small business. However, additional services and assistance may be available under Category I, including minimum stocks of materials, such as an inventory of salable merchandise and essential equipment, including machinery, occupational fixtures, accessories and appliances.
Before all the Service Disabled Veterans get too excited about these possibilities they must recognize that the VRE process, although improving, can be much more time consuming and complex than conventional resources. One reason for this is that VRE must examine more than typical financing and market factors to determine feasibility. Another reason is that provision of services is based on category assignment and that VR&E must not be considered the sole source in establishing a business. In addition, before any final decision, it is imperative that the VRC have a clear understanding of the Veterans’ motivation, functional ability and interest, as self-employment is one of the most demanding tracks to employment.
On the other hand the effort may be especially worthwhile to the SDV as any monies provided under the Program could be counted as equity when seeking conventional debt financing. If a franchise candidate can show that some of his/her equipment costs are already covered, the likelihood of feasibility increases. Many franchisors seek Veterans due to their discipline and commitment characteristics but can’t close the deal due to a shortage of equity contribution by the Veteran.
Operating a franchise could be much more challenging than simply obtaining and maintaining employment in a traditional setting. Accordingly, it is the responsibility of the VRC to assist the Veteran to make an informed decision regarding self-employment as an appropriate career track. Typical demands and challenges associated with pursuing self employment include •developing a viable business plan. Obtaining funding, etc. Just as importantly is the VRC’s responsibility to help guide the Veteran to balance the personal disability challenges particular to their individual circumstances. Nevertheless, all VRCs are committed to work closely with a SDV to foster an open line of communication to access internal VA resources which would help make any business successful.
VBS’ Founder and Managing Director, Jim Mingey, is a decorated Vietnam veteran raised from a proud military background. An entrepreneur for more than 35 years, Jim can relate on a personal level to the needs of the veteran small businessperson, and possesses the practical knowledge to implement his experience in today’s market. Jim participated in the EBV Program at Purdue University, is a mentor at American Corporate Partners, developed the first approved franchise training program for the Vocational Rehabilitation and Employment (VR&E) Program at Veterans Administration, and was instrumental in forming the first equity fund in the United States exclusively for veteran owned small businesses and franchises: The Veterans Opportunity Fund. Jim intends to keep on ‘advocating’ for veterans in franchising.
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