WASHINGTON – Today Senator John Kerry (D-Mass.), Chairman of the Committee on Small Business and Entrepreneurship, sent letters to the Department of Defense, Department of Veterans Affairs and Small Business Administration calling on the agencies to work together to reach out to veterans and reservists in the Commonwealth and across the country to inform them about available small business programs. Kerry also released the following statement in reaction to the Small Business Administration's announcement of a pilot loan program targeted to serve veterans, reservists and their spouses:

"This program is a good first step by Administrator Preston to address the growing needs of America's veterans and reservists in Massachusetts who work for or want to start a small business. We have nearly 477,000 veterans in our state – many of whom already own or are planning to start a small business – and getting this much-needed capital will be critical to their success. I will work with Administrator Preston to lower the interest rate and reduce loan fees for this program and hopefully make it a success.

"As the Administration develops a plan to reach out to veterans and reservists about this new program, it must be aggressive, comprehensive and coordinated so our military service members and their families right here in Massachusetts are aware of all the resources available to them. The Administration must provide information about the Military Reservist Economic Injury Disaster Loan program as part of this outreach and work with Congress to make important fixes to it.

"The SBA needs the full weight of the White House behind them to put the money and resources necessary into this program to make it a success. However, there is more we can do including improving existing loan programs, creating grant programs, implementing tax incentives for small businesses that employ reservists, and enforcing the government's federally mandated contracting goal with service-disabled veteran owned firms."

Under the SBA's new program, today a veteran or reservist would pay 10.5 to 13 percent in interest on a loan. While this is a few percentage points less than other express loans, the rate is far higher than on loans made through the Military Reservist Economic Injury Disaster Loan program, which are capped at four percent. Kerry created this program in 1999 for small businesses that have experienced economic hardship due to the deployment of an owner or key employee, yet most reservists do not know about this program due to a lack of information provided by the Administration and lack of coordination among the relevant federal agencies.

Today there are more than 25 million veterans in America, with more than 1.1 million men and women who have left military service since 2001. In Massachusetts, there are approximately 25,000 Iraq and Afghanistan veterans and since September 2001, more than 16,000 servicemen and women from Massachusetts have been deployed – ranking 7th in the country overall. Over the last five years, more than 500,000 reservists have been called to active duty across the country – and they are often staying longer or serving multiple deployments. These numbers demonstrate the need for a comprehensive, coordinated effort by the Administration to reach out to these men and women to make sure they know about small business loans and counseling available to help them preserve their business while they are deployed or to start a business after their service is completed.

Senator Kerry has been a leader in the Senate to expand economic opportunities for veterans and reservists after they have served their country and is the author of several proposals to achieve these goals.

Last Congress, Kerry introduced the Military Family Bill of Rights, a bill that provided comprehensive and direct assistance for military members and their families, including loans, grants and tax credits for Guard and Reserve members who own their own small businesses or work for one. Additionally, Kerry led a field hearing in Massachusetts to discuss ways to ease the burden of lengthy deployments on National Guard and Reservists who own or work for small businesses.

This year, Kerry has taken many steps to address the concerns of veteran and reservist small business owners and employees, including:
  • In January, Kerry held a hearing to examine federal small business assistance programs for veterans and reservists.
  • In January, Kerry introduced the Active Duty Military Tax Relief Act to create new tax credits that bolster small businesses and their employees.
  • In March, Kerry released a report on the State of Veteran and Reservist Entrepreneurship outlining the challenges veterans and reservists face in starting or expanding a small business and detailing some solutions.
  • In March, Kerry introduced bipartisan legislation to strengthen and improve the Military Reservist Economic Injury Disaster Loan program, expand resources for the SBA's Office of Veterans Business Development, and create a new veteran loan program.
  • In May, Kerry wrote to Defense Secretary Robert Gates seeking increased accountability in the agency's contracting goals with service-disabled veteran owned firms.
  • This year, Kerry worked to expand the definition of disabled veterans eligible for the work opportunity tax credit (WOTC). This expansion was included the small business tax breaks that passed as part of the emergency supplemental appropriations bill. This law extended the WOTC through August 2011.

  • Following is the text of the letter Kerry sent to Secretary of Defense Robert Gates, Secretary of Veterans Affairs Jim Nicholson, and SBA Administrator Steven Preston:

    June 13, 2007

    The Small Business Administration announced today the implementation of a new loan program, the Patriot Express Loan Pilot, aimed at our nation’s veterans. This pilot tailors the 7(a) Express Loan program for veterans, reservists and their spouses and will complement the existing Military Reservist Economic Injury Disaster Loan program, which was created in 1999 to help mitigate the financial loss and hardship suffered by small businesses affected by the deployment of the owner or a key employee.

    To help make the Patriot Express Loan Pilot a success, and to improve outreach to those in need of the Military Reservist Economic Injury Disaster Loan program, the Small Business Administration (SBA) will need cooperation, coordination, and commitment from the Department of Veterans Affairs and the Department of Defense. Lack of coordination among the agencies and departments to aggressively explain and market these targeted small business programs is one of the biggest problems preventing the successful delivery of small business government assistance to our veterans and reservists. In a hearing before the Senate Committee on Small Business and Entrepreneurship on January 31, 2007, witnesses testified that veterans and reservists are not aware of the programs currently offered by the SBA to meet their needs, and the Administration witnesses acknowledged that agencies are not working together. This testimony, unfortunately, is not new. Rather it is supported by various reports, as summarized by a Committee report released on March 28, 2007, entitled the State of Veteran and Reservist Entrepreneurship.

    I hope to see this program succeed and will work with the SBA to find ways to lower the interest rates and fees for these loans. However, the success of this and all SBA programs for veterans and reservists requires a commitment well beyond today's announcement. I want to remind the Administration that Congress has been working for years to enact similar programs to help our men and women in uniform succeed as business owners both during and after their service to our country. In 2005, I introduced the Military Family Bill of Rights, and this year I have introduced the Military Reservist and Veteran Small Business Reauthorization Act. Steps need to be taken to improve the Military and Reservist Economic Injury Disaster loan program and expand counseling and other assistance to reservists and veterans. These proposals are critical to ensuring the government keeps its promises to our veterans, and I urge the Administration to work with Congress to implement them.

    In addition, it is important to remember that these issues are not the only ones affecting veteran small business owners. Increasing federal procurement with service-disabled veteran owned firms is not only required by law, but also an important way the government can support veteran small businesses. Overall, the federal government's contracting record with service-disabled veteran owned firms is a mere .605 percent – well short of the federally mandated goal of three percent, according to the most recent data available (2005). Expanding opportunities for veterans to do business with the federal government will require a coordinated effort but must remain a priority for all agencies.

    For the remainder of this year, I would like to be updated on how the Administration is implementing veteran small business programs. Please provide the Senate Committee on Small Business and Entrepreneurship monthly reports on how the agencies are working together to market SBA's pilot loan program, as well as the Military Reservist Economic Injury Disaster Loan program. I believe Congress and the Administration can work together in a bipartisan manner to address the needs of our nation's veterans and reservists, and I look forward to working with each of you to do so.


    John F. Kerry Chairman