A proposed change to the popular post-9/11 G.I. Bill would allow veterans to use their education benefits as startup collateral to start their own businesses.
"If we could do this, it would change the landscape for our veterans" who choose not to go to college, said C. Lynn Lowder, a retired major who was a Force Reconnaissance Marine in Vietnam.
Lowder formed 1 Vet at a Time, an organization built about one year ago to advocate for jobs and entrepreneurship for the 40 percent of current generation veterans who don't use the G.I. Bill's education benefits valued at about $186,000. He said he works with mostly junior enlisted troops -- "those PFCs, lance corporals, corporals, and young sergeants."
"They're focused, motivated and loyal to a fault," Lowder said. "They're trying to get their feet on the ground, feeling for zero," and they can be clueless on how to start a business. The problem for the young veterans with a business dream in most cases is that "there's no way to get a loan. The access to capital is a challenge," he said.
Lowder has teamed up with Marine Lt. Col. Joe Plenzler to devise a plan to modify the post-9/11 G.I. Bill to allow veterans to use the education benefits be used as collateral for a business venture.
The projected education benefits that a veteran had earned could then be used "to get them sufficient capital to qualify for a low interest loan at a fixed rate," said Plenzler, who worked for former Marine Corps Commandant Gen. Jim Amos, and plans to soon retire from the Marines.
Lowder and Plenzler estimated that the government currently was funding four years of college under the G.I. Bill that would be worth about $186,000, when tuition, housing allowances and book stipends are considered.
A veteran could access that funding for loan collateral under Lowder and Plenzler's proposal. The two Marines also set up methods in which the veteran can receive mentorship and training to help the business succeed.
Before a veteran could access that funding for loan collateral, the business plan would have to be vetted and approved by an independent board of business experts. The veteran would also have to attend a boots-to-business course at an accredited university.
With that done, the veteran would then apply to access the capital in their G.I. Bill as a no-interest loan to be paid back over 10 years.
"The way we look at it, if you can run a squad, you can run a business. The problem everyone runs into is access to capital," he said.
The American Legion, a veterans advocacy group with 2.4 million members, has made a similar proposal. In 2013, the Legion's National Executive Committee passed Resolution 26, which urged Congress to amend the post 9/11 G.I. Bill to allow veterans to convert the value of their educational benefits toward funding to start a business or help expand a business they have already started.
"Some of the most successful business owners chose entrepreneurship over formal education. The men and women who serve our country deserve the same opportunity," wrote then-American Legion National Commander Daniel Dellinger on Jan. 1, 2014. "They've learned elite management and logistics skills during their time in the military; let's help them put these skills to use in the business world when they come home."
A spokeswoman for Student Veterans of America said the Lowder and Plenzler's proposal was already circulating among Capitol Hill staffers of both parties and there was a possibility that legislation could be introduced in Congress in the current session.
Congress has worked in the past to help veterans receive small business loans. After World War II, the Servicemen's Re-Adjustment Act of 1944, which first introduced the G.I. Bill included low-interest loans for veterans to start a business.
The new Post-9/11 G.I. Bill passed in 2008 pays full tuition for public colleges and universities and a national maximum rate for private schools, but it does not include the provision for low interest business loans. It also covers vocational training, and contains a housing allowance and book stipend. In cases of extended military service, unused benefits can be transferred to a spouse or children.
The business startup modification to the G.I. Bill would have to be drawn up with safeguards to ensure that veterans have a chance for success that would enable them to pay back the loans, said J. Michael Haynie, executive director of the Institute for Veterans and Military Families (IVMF) at Syracuse University.
Haynie said he was supportive of what he called "a very novel proposal" put forward by Lowder. "I think it has an awful lot of merit. It is a compelling option for service members and veterans," Haynie said. "When you look at what the challenges and barriers are, access to capital is always number one."
However, Haynie cautioned that most startup businesses fail, and the G.I. Bill proposal would need guarantees that veterans applying would receive mentorship and training.
"These kids can do it, they absolutely can do it" in business, said Lowder, the former director of Military Veterans Services at the University of Central Missouri. "They just need a little help."
-- Richard Sisk can be reached at Richard.Sisk@military.com.