Exploring the Options for Veterans
By Liz Leonard
Today we host guest writer Liz Leonard, a franchisor, coach, and author of a forthcoming book on franchising. We hope you enjoy this piece on an oft-uncovered option for transitioning military members!
Transitioning from active military service to civilian life can be jarring—to say the least. The
challenge of moving from the structured environment of missions and drills to the varied options
for work post-service can seem overwhelming, but fortunately, there are many resources to
support veterans in their business goals.
Franchising is a popular option for veterans because these businesses already have built-in
structure while also affording all the benefits of business ownership. Franchisees don’t need to
build their businesses from scratch; instead, you work with an existing service, product, or
brand. With a chain of command and framework familiar to the military, veterans are often well
prepared to follow and execute the plan offered by franchise businesses.
Funding to Purchase a Franchise
But how do you finance your dream of business ownership? There are several options to
finance a franchise business, and veterans have access to a number of additional programs as
well. The ideal funding program (or combination of options) will depend on the type of franchise
you’re pursuing.
SBA Loans, or small business administration loans, are available through the government.
These loans are designed to support small businesses, providing resources that promote
growth and development. The SBA offers loans specifically for those who want to franchise,
including the 7(a) and 504 loan programs.
Some institutions even have versions of the SBA loans specifically for active-duty
servicemembers, veterans, and their spouses. These programs often offer more flexibility than
general SBA loans, permitting a wider range of credit scores and net worth without requiring
collateral and still offering low monthly payments.
ROBs, or rollovers as business startups, allow those with retirement accounts to invest their
saved money into their businesses without taxes or early withdrawal penalties. Making this
money available with an ROB and using it to fund your franchise can be a cost-effective way to
start your business.
Conventional bank loans are also always an option for franchising, but they may have higher
interest rates and lack the tax credits and benefits of other loans specifically for veterans.
In addition to these funding options, many franchises offer discounts to veterans looking to
purchase a franchise. Non-profit organizations dedicated to military service personnel can also be valuable resources to help present and former military personnel find additional funding to
support their small business plans.
Funding to Run, Grow, and Scale Your Franchise
Once you’ve purchased your franchise, you’ll also need to ensure you have the right amount of
working capital to run and grow your business effectively. Additional funding sources can help
you maintain the right level of cash flow.
Securities backed by lines of credit can be a helpful solution to short-term cash flow needs.
This kind of funding is a revolving credit line, or consistent line of credit that is available over
time even if the balance is paid. These loans must be backed up by some kind of resource,
often a piece of real estate, and can be repaid as needed over time. Business owners with
secured loans can often borrow larger amounts of money with lower interest rates due to the
collateral.
For businesses that require specialized equipment, equipment leasing can be a helpful, cost-
effective option to consider as you’re getting started. Rather than putting large sums of money
into buying equipment, business owners can use equipment without a large down payment.
Leasing equipment also makes it possible for business owners to easily update equipment
without losing money and to scale as their business grows. Section 179 of the tax code allows
business owners to take deductions for business expenses, which can be helpful when leasing
equipment because the amount of money paid for the lease is deducted year after year.
Like conventional bank loans, home equity loans and HELOCs (home equity lines of credit)
offer a method of getting money to invest in your business but do not typically offer any special
advantages to veterans. Home equity loans are loans with a fixed rate and payment schedule
with your home as collateral, while HELOCs are revolving credit lines whose minimum
payments and interest rates will change with the markets.
Financing Your Future
Joining the world of franchising can be a great way to smooth the transition into civilian life for
veterans. In my book, Your Franchise Fast Pass, I share Quentin’s story. As a retired military
police officer, Quentin recognized franchising as an opportunity to become a business owner
without needing to reinvent the wheel. He built up several franchises offering services and
products he felt would be consistently important to consumers. Growing his franchises gave
Quentin a sense of identity and purpose as he transitioned from the structure of military life back into the civilian workplace.
If franchising is part of your transition into civilian life, understanding the various available
funding sources is an essential step in building your business—both as you’re making the initial
franchise purchase and as you’re running and growing your business.
About Liz Leonard
Liz Leonard is a franchise advisor with a mission to empower people to make informed
decisions to realize their vision of owning a thriving franchise. She has spent the last two
decades operating businesses and helping others make their entrepreneurship dreams a reality
via franchise ownership. She is the author of the new book, Your Franchise Fast Pass: Your
Step-By-Step Guide to Finding Your Ideal Business. Discover more at
lizleonardfranchiseadvisor.com.
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Military Money Matters 