Veterans small business entrepreneurship pilot program

Section 32 of the Small Business Act (15 U.S.C. 657b) is amended by adding at the end the following:

(h)

Veterans small business entrepreneurship pilot program

(1)

Pilot program required

(A)

In general

Not later than 90 days after the date of enactment of this subsection, the Administrator, in consultation with the Advisory Committee and the Secretary of Veterans Affairs, shall begin carrying out a pilot program to assess the feasibility and advisability of making grants to eligible veterans to start or acquire a qualifying business enterprise. (B)

Promotion of efficiency

In carrying out the pilot program, the Administrator shall ensure, to the maximum extent practicable, that the pilot program promotes efficiency, accountability, and competition. (C)

List of categories of business enterprises

The Administrator, in consultation with the Advisory Committee, shall by rule establish a list of categories of business enterprises that the Administrator determines to be qualifying business enterprises for purposes of the pilot program, which shall include— (i)a small business concern; (ii)a franchise business enterprise; and (iii)any other category of business enterprise that the Administrator, in consultation with the Advisory Committee, determines is appropriate and in accordance with the purposes of the pilot program. (D)

Number of grants

Under the pilot program, the Administrator may make grants in accordance with paragraph (4) to not more than 250 eligible veterans to start or acquire a qualifying business enterprise. (E)

Geographic diversity

In making grants under the pilot program, the Administrator shall ensure geographic diversity among the veterans who receive the grants. (F)

Duration

The Administrator shall carry out the pilot program during the 3-year period beginning on the date on which the Administrator begins carrying out the pilot program. (2)

Application

(A)

In general

An eligible veteran desiring a grant under the pilot program shall submit an application— (i)to the Administrator in the form and containing the information as the Administrator may require, including the information described in subparagraph (B); and (ii)not later than 1 year before the date on which the pilot program terminates under paragraph (1)(F). (B)

Documentation requirements

The Administrator, in considering an application from an eligible veteran for a grant under the pilot program, may not approve the application unless the application includes the following: (i)A description of the use of the grant amount, including an identification and description of the qualifying business enterprise. (ii)A description of the expected return on investment resulting from the grant amounts. (iii)A certification that the eligible veteran applying for the grant— (I)shall complete the education and training relevant to the ownership and operation of the qualifying business enterprise described in paragraphs (3)(A) and (3)(B); and (II)understands that the eligible veteran may not receive amounts under a grant under the pilot program until after the eligible veteran has completed the required education and training relevant to the ownership and operation of the qualifying business enterprise described in paragraphs (3)(A) and (3)(B). (iv)Such certifications as the Administrator, in consultation with the Advisory Committee, shall by rule require, including— (I)for a business enterprise in operation on the date of the application, evidence that the Administrator, in consultation with the Advisory Committee, determines appropriate of— (aa)good standing; (bb)profitable operation; and (cc)guarantees relating to the purchase of the enterprise; (II)for a franchise business enterprise, evidence that the Administrator, in consultation with the Advisory Committee, determines appropriate of— (aa)compliance with applicable State and Federal laws on franchises; and (bb)training in conformation with the industry standard; and (III)for a startup, or an enterprise that is otherwise not in operation at the time of the application, a proposal for the operation of that enterprise that leads to profitable operation within a reasonable time frame. (v)A certification that the eligible veteran applying for the grant understands that the eligible veteran may not receive amounts under the grant until after the business plan of the eligible veteran has been approved under the procedures described in paragraph (3)(C)(ii). (vi)A certification that the eligible veteran— (I)has been truthful about the employment status of the eligible veteran; and (II)understands that the eligible veteran will be prohibited from participating in the pilot program if the certification described in subclause (I) is determined to be untrue. (C)

Group applications

The Administrator may authorize a group of eligible veterans to apply as a group under the pilot program. The group shall be treated as a single eligible veteran under the pilot program, except that the maximum amount of the grant shall be calculated by multiplying the maximum amount under paragraph (4)(A) by the number of members of the group. (3)

Entrepreneurship training

(A)

In general

Each eligible veteran receiving a grant under the pilot program shall complete an entrepreneurship readiness program approved by the Administrator that is designed to prepare the eligible veteran for, and lead to the immediate subsequent ownership and management by the eligible veteran of, a qualifying business enterprise. (B)

Approved programs

An approved program described in subparagraph (A) may include a program— (i)available through a small business development center; (ii)approved by the Administrator for entrepreneurship training; (iii)approved by the Secretary of Veterans Affairs for entrepreneurship training; (iv)available through the Transition Assistance Program of the Department of Defense; (v)available through a women’s business center, as described in section 29; (vi)available through a Veterans Business Outreach Center, as described in subsection (d); (vii)available through the SCORE program authorized by section 8(b)(1); or (viii)approved by the Administrator, in consultation with the Advisory Committee, as appropriate because of the expertise the program offers relating to a certain type of business enterprise. (C)

Business plan

(i)

Contents

An eligible veteran receiving a grant under the pilot program shall prepare a business plan, which shall include— (I)a description of how the qualifying business enterprise will achieve profitable operation within a reasonable time frame; (II)an assessment of relevant— (aa)economic indicators; (bb)consumer data; (cc)production and sales data; and (dd)market or industry analysis; and (III)other information that the Administrator, in consultation with the Advisory Committee, determines is appropriate. (ii)

Approval procedure

(I)

Approval by advisor

If an advisor approves the business plan prepared by the eligible veteran, the Associate Administrator for Veterans Business Development of the Administration— (aa)shall review the business plan; and (bb)may reverse the approval of the business plan and require that the eligible veteran continue to consult with the advisor to develop and resubmit the business plan. (II)

Disapproval by advisor

If an advisor does not approve the business plan prepared by an eligible veteran, the Associate Administrator for Veterans Business Development of the Administration, upon appeal by the eligible veteran, may reverse the decision of the advisor and approve the business plan. (4)

Grant terms and conditions

(A)

Maximum grant amount and additional assistance

(i)

In general

Subject to paragraph (2)(C), the maximum amount that an eligible veteran may receive under the pilot program shall not exceed an amount equal to the sum of— (I)the maximum grant amount specified in clause (ii); (II)the amount equal to the product obtained by multiplying— (aa)the amount of additional assistance to which the eligible veteran is entitled under clause (iii)(II); by (bb)the number of months that the eligible veteran participates in the pilot program; and (III)the amount of training assistance received by the eligible veteran in clause (iv). (ii)

Maximum grant amount

The maximum grant amount specified in this clause is the following: (I)In the case of an eligible veteran entitled to educational assistance under chapter 33 of title 38, United States Code, the amount equal to the product obtained by multiplying— (aa)the number of months of educational assistance to which the eligible veteran is entitled on the date that the eligible veteran submits an application; by (bb)the pro rata monthly rate of the amount that the eligible veteran is entitled to under paragraph (1)(A)(ii)(II) of section 3313(c) of that title, subject to paragraphs (2) through (7) of that section. (II)In the case of an eligible veteran entitled to educational assistance under chapter 30 of title 38, United States Code, the amount equal to the product obtained by multiplying— (aa)the number of months of educational assistance to which the eligible veteran is entitled on the date that the eligible veteran submits an application; by (bb)the rate in effect under section 3015(a)(1) of that title. (iii)

Additional assistance

(I)

Period of eligibility

An eligible veteran shall receive the amount described in subclause (II) for each month that the eligible veteran participates in the pilot program. (II)

Amount

The amount of the additional assistance specified in this subclause is an amount, paid to the eligible veteran on a monthly basis, equal to the product obtained by multiplying— (aa)the monthly amount of the basic allowance for housing payable under section 403 of title 37, United States Code, for a member with dependents in pay grade E–5 residing in the military housing area that encompasses all or the majority portion of the ZIP Code area in which is located the residence of the eligible veteran (similar to the calculation made under section 3313(c)(1)(B)(i)(I) of title 38, United States Code); by— (bb) (AA)in the case of an eligible veteran who, as of the date on which the eligible veteran applies for a grant under this subsection, has no employment other than the qualifying business enterprise for which the eligible veteran seeks a grant under this subsection, 1; or (BB)in the case of an eligible veteran who is not described in subitem (AA), 0.5. (iv)

Training assistance

Upon application by an eligible veteran receiving a grant under the pilot program, the Administrator may pay for the cost, if applicable, of an approved program described in paragraph (3)(B)(viii). (B)

Disbursement

The amount of a grant made under the pilot program shall be disbursed to an eligible veteran— (i)in installments, in accordance with the procedures described in subparagraph (C); (ii)only after the eligible veteran presents documentation proving that the eligible veteran has completed the required entrepreneurship training described in paragraphs (3)(A) and (3)(B); and (iii)only after the business plan of the eligible veteran has been approved under the procedures described in paragraph (3)(C)(ii). (C)

Installment payments

The amount described in subparagraph (A)(ii) shall be paid to the eligible veteran in installments on a pro rata basis with each installment being paid to the eligible veteran— (i)not earlier than 3 months after the date of the payment of the most recent installment to the eligible veteran; (ii)not later than 12 months after the date of the payment of the most recent installment to the eligible veteran; and (iii)only after the eligible veteran has met milestones established in the business plan of the eligible veteran. (5)

Use of grant amounts

An eligible veteran who receives a grant under the pilot program may use the amount of the grant— (A)in accordance with the limitations that the Administrator, in consultation with the Advisory Committee, may by rule establish; and (B)for purposes related to starting or acquiring a qualifying business enterprise that the Administrator, in consultation with the Advisory Committee, determines are appropriate, including— (i)purchasing goods or services necessary for the creation or operation of a qualifying business enterprise; (ii)funding a project that is directed toward any economic development objective described under section 501(d) of the Small Business Investment Act of 1958 (15 U.S.C. 695(d)); and (iii)acquiring a qualifying business enterprise. (6)

Report

(A)

In general

Not later than 2 years after the date on which the pilot program is commenced, the Administrator shall submit to the Committee on Small Business and Entrepreneurship and the Committee on Veterans’ Affairs of the Senate and the Committee on Small Business and the Committee on Veterans’ Affairs of the House of Representatives a report analyzing the feasibility and effectiveness of the pilot program. (B)

Contents

The report submitted under subparagraph (A) shall include— (i)an assessment of the pilot program; (ii)a survey containing— (I)the number of grantees under the pilot program; and (II)the number of the grantees under the pilot program that participated in each of the training programs described in subparagraphs (A) and (B) of paragraph (3); (iii)recommendations regarding whether any aspect of the pilot program should be made a permanent authority, and, if so, the means to ensure— (I)geographic and demographic diversity among the eligible veterans who receive the grants under the permanent authority; and (II)diversity in the types of qualifying business enterprises for which eligible veterans may receive grants under the pilot program; (iv)an assessment regarding whether the grants distributed under the pilot program should continue to be made in installments or with a 1-time, lump sum payment; (v)an assessment of the additional assistance made available under the pilot program, including the accountability surrounding the availability of additional assistance; (vi)an analysis of the procedures for approving a business plan and a recommendation regarding ways, if necessary, to improve the procedures; and (vii)a recommendation regarding ways, if necessary, to improve the accountability of advisors. (7)

No effect on time limitation for use of entitlement to educational assistance

Nothing in this subsection shall be construed to modify any time limitation or period during which an individual is entitled to educational assistance under chapter 30 or 33 of title 38, United States Code. (8)

Definitions

In this subsection: (A)

Advisor

The term advisor means a person— (i)affiliated with an entrepreneurship or training and curricula program described in paragraphs (3)(A) and (3)(B); (ii)who may assist an eligible veteran with the preparation and approval of a business plan; and (iii)who is approved to serve as an advisor by the Administrator, in consultation with the Advisory Committee. (B)

Advisory committee

The term Advisory Committee means the Advisory Committee on Veterans Business Affairs established under section 203 of the Veterans Entrepreneurship and Small Business Development Act of 1999 (15 U.S.C. 657b note). (C)

Business plan

The term business plan means a plan prepared by an eligible veteran for the operation of a qualifying business enterprise that shall be— (i)prepared— (I)while the eligible veteran participates in an approved training program described in paragraphs (3)(A) and (3)(B); and (II)with the assistance of an advisor; and (ii)consistent with the guidelines and recommendations provided by the Business Plan Tool of the Administration. (D)

Eligible veteran

The term eligible veteran means an individual who— (i)is— (I)a veteran; or (II)a member of the Armed Forces who— (aa)is currently retiring or separating from the Armed Forces and has a service approved retirement or separation packet; or (bb)has last been honorably discharged from active duty service in the Armed Forces; (ii)has completed not less than— (I)36 months of active duty service in the Armed Forces (other than active duty service for training); or (II)24 months of active duty service in the Armed Forces (other than active duty service for training) before being discharged or separated for a service-connected disability, as that term is defined in section 101 of title 38, United States Code; and (iii)is entitled to educational assistance under chapter 30 or 33 of title 38, United States Code. (E)

Franchise business enterprise

The term franchise business enterprise means any continuing commercial relationship or arrangement, regardless of the title given the relationship or arrangement, under which the terms of the offer or contract specify, or the franchise seller promises or represents, orally or in writing, that— (i)the franchisee will obtain the right to— (I)operate a business that is identified or associated with the trademark of the franchisor; or (II)offer, sell, or distribute goods, services, or commodities that are identified or associated with the trademark of the franchisor; (ii)the franchisor may— (I)exert, or has authority to exert, a significant degree of control over the method of operation of the franchisee; or (II)provide significant assistance in the method of operation of the franchisee; and (iii)as a condition of obtaining or commencing operation of the franchise business enterprise, the franchisee makes a required payment or commits to make a required payment to the franchisor or the affiliate of the franchisor. (F)

Franchisee

The term franchisee means any person who is granted a franchise business enterprise. (G)

Franchisor

The term franchisor— (i)means any person who grants a franchise business enterprise and participates in the franchise relationship; and (ii)includes subfranchisors. (H)

Pilot program

The term pilot program means the pilot program established under paragraph (1)(A). (I)

Qualifying business enterprise

The term qualifying business enterprise means a business included in the list of categories of business enterprises established under paragraph (1)(C). (J)

Startup

The term startup means a business enterprise that— (i)is not yet in existence; or (ii)has been in existence for not more than 5 years. (K)

Subfranchisor

The term subfranchisor means a person who functions as a franchisor by engaging in both pre-sale activities and post-sale performance.