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Banking on Veterans in Franchising

It’s unlike any sales pitch you’ve ever seen before. It is not a slick visual presentation with catchy one-liners or shocking statistics. It’s actually quite underwhelming: an ordinary American, standing off-center in front of a basic video camera, making a candid and honest explanation of why she is looking for financing for her next business project.
Without turning on your computer’s sound to hear the audio coming from Amanda Crow’s Boost A Hero campaign video, a casual Internet surfer might browse away from the page and resume any other mundane daily Internet activity.
However, Crow’s spoken words grace the air as one turns up the volume, making it evident that she is anything but ordinary. Her passion for success and service become evident as the U.S. Navy veteran and PostNet franchise owner in Virginia Beach, Va. describes how she became a PostNet owner, and how that experience has spurred her to want to go further in franchising. Crow is one of the first candidates on Sprigster’s Boost A Hero–a franchise-focused online “crow–funding” platform, where she asks for support to open another PostNet store and employ more veterans (in addition to the two vets and one military spouse already on her PostNet team).
Veterans make fantastic franchise owners. The International Franchise Association’s VetFran program is based on the idea that qualities common to military veterans also produce successful franchisees and anchor growing franchise systems. In a hesitant economic recovery, however, the obstacle of financing can be the biggest challenge for many aspiring entrepreneurs, among them veterans who want to hire other veterans.
IFA supplier members in the financial services arena are playing an increasingly critical role in the efforts of VetFran as entrepreneurial veterans search for start-up capital in these still challenging economic times. In addition to providing discounted services to veterans, Franchise America Finance and Guidant Financial Group, Inc. have been standout VetFran members. A full 100 percent of Franchise America Finance’s franchisor clients are VetFran members, contributing to Operation Enduring Opportunity’s ambitious veteran hiring targets, while Guidant Co-Founder and CEO David Nilssen has jumped in with a commitment to enable 500 veterans to become small-business owners through an unprecedented offering of Guidant’s financing programs free of charge.
These financial suppliers and other VetFran partners such as Bancorp Bank and BoeFly, LLC are helping fill the financing void left by the failure of lending to expand at the same rate as the demand for franchise locations. Social responsibility on behalf of franchise industry partners, along with veterans’ valuable military skills and specialized financing vehicles dedicated to serving veterans can make a big difference. Guidant Financial helped U.S. Army veteran James Mullen secure financing for his 1-800-DryClean franchise in San Antonio, Texas, and fellow U.S. Army vet Craig Rector would not have been able to open his Las Vegas Quiznos location without BoeFly, the online tool that helps connect entrepreneurs with potential lenders.

What Bankers See in Veterans
What do loan officers see when they look at an application: a credit score and income statements or a budding businessman with the potential to bring jobs to the community? Veterans can have significant advantages in the conventional loan application process due to their skills acquired through military service, the possibility of other financial resources and the desire of lenders to serve those who have served our country.
“A major factor in the decision-making process in financing is relevant experience,” said Nilssen. “Proven leadership in the military is a valuable skill that is easily transferred to managing and growing a business.” Any loan applicant should strive to present himself or herself as an individual with a compelling story, Nilssen explained, helping loan officers factor in dedication and character, qualities that veterans have in abundance. In other words, veterans should not wear their camouflage to blend in with other loan applicants, but to stand out with discipline, character and marketable skills.
Another advantage held by veterans after long military careers of service is a pension. “Banks are enamored with that kind of additional income,” said Franchise America Finance CEO and Principal Ron Feldman, CFE, who went on to explain that a significant, stable source of income, independent of the trajectory of the proposed business, is a major boost to any veteran who is looking for business startup cash.
Not only does veteran status tend to denote a valuable skill set and entrepreneurial potential, but, “veteran status in and of itself can boost an application across the finish line,” said Feldman.
Contrasting Methods with a Common Purpose
An overwhelming majority of franchise loans are provided by community banks that support successful local businesses and establish lasting personal relationships with clients. Sean Falk, a multi-unit, multi-concept franchisee of Great American Cookie, Pretzelmaker, Mrs. Fields Cookies and Salsarita’s Fresh Cantina, told a group of congressional staff at an IFA-sponsored briefing on Capitol Hill in December that he felt loyal to the community bank that took a chance by giving him his first business loan, and that he would gladly do business there again.
However, in the current restricted lending environment, Small Business Administration guaranteed loans have become one of the few remaining and available vehicles to launch small businesses with the working capital they need. SBA’s Patriot Express loans are similar to SBA’s 7(a) loan program, but Patriot Express is exclusive to military veterans and their spouses. Although Patriot Express loans can often come with higher interest rates, with a 3.25 percent prime rate plus 2.25 percent-4.75 percent, as opposed to the 5.8 percent average interest rate across similar small-business loans (according to the National Federation of Independent Business’ February 2012 survey of borrowers), they can provide a higher guarantee than 7(a) loans, up to 85 percent.
Patriot Express loans, like other SBA guarantees, take time for process and approval. “Working for the government may help veterans be better prepared to handle bureaucracy and red tape,” Feldman quipped. However SBA, which has publicly supported IFA’s Operation Enduring Opportunity, is working toward creating a more efficient and streamlined system to approve applications.
Like Amanda Crow, veterans now have a new, unique opportunity to access start-up cash by tapping into the vast resources of the “crowd.” Crowdfunding, a social media-driven fundraising strategy that solicits large numbers of smaller donations for a specific cause, is a platform that has roots in fundraising for charitable or community projects, but has gradually grown into a tool to fund entrepreneurs.
Buzz for crowdfunding initiatives is created through the use of Facebook, Twitter, Google+ and other social media platforms to generate interest in multiple social circles, whether it be a local community, fellow veterans, or friends and family. That casual Internet surfer who browsed away from Crow’s campaign page could be drawn back by seeing her video popping up all over the social media universe with re-tweets, “Likes” and +1’s.
“No other type of financing has that level of stickiness,” explained Todd Jones, senior vice president at Sprigster. “They cannot only use social media to attract financing, but can use that same social network to promote her new business once she reaches their goal.” Although Crow’s PostNet is a charter project for Boost A Hero and has a way to go before reaching its financial goal, the platform holds enormous potential for the financing of future projects as crowdfunding grows in popularity and reach.
Crowdfunding faced significant legal and regulatory hurdles until early April, when the Jumpstart Our Business Startups (JOBS) Act passed Congress with overwhelming support and promptly received President Obama’s signature. Although the legislation has lowered many barriers to investment in small businesses, crowdfunding still struggles to receive recognition as a mainstream financing method. However, both the more-traditional SBA guarantees and the innovative Sprigster platform, along with support from industry finance leaders, are expanding the horizons for veterans looking to apply their valuable skills and experience to a business venture.
As IFA President and CEO Steve Caldeira, CFE, has said, “Veterans fought for us, now we need to fight for them. It is great to see IFA finance leaders stepping up to provide critical support in this vital mission.” 
Kevin Serafino is legislative aide, government relations & public policy at the International Franchise Association. He can be reached at


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