[Senate Report 114-240]
[From the U.S. Government Publishing Office]


                                                      Calendar No. 105
114th Congress }                                          { Report
                                 SENATE
 2d Session    }                                          { 114-240

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                     VETERANS ENTREPRENEURSHIP ACT

                                _______
                                

                 April 21, 2016.--Ordered to be printed

                                _______
                                

Mr. Vitter, from the Committee on Small Business and Entrepreneurship, 
                        submitted the following

                              R E P O R T

                         [To accompany S. 957]

    The Committee on Small Business and Entrepreneurship, to 
which was referred the bill (S. 957) to increase access to 
capital for veteran entrepreneurs to help create jobs, having 
considered the same, reports favorably thereon without 
amendment and recommends that the bill do pass.

                            I. INTRODUCTION

    The Veterans Entrepreneurship Act (S. 957) was introduced 
by Senator Jeanne Shaheen on April 15, 2015. Senator Shaheen 
was joined by Senators Angus King and Maria Cantwell in 
introducing the bill. The bill is also co-cosponsored by 
Committee members Senator Kelly Ayotte, Senator Deb Fischer, 
Senator Mazie Hirono, Senator Christopher Coons and Senator 
Gary Peters, as well as Senator Michael Bennet.
    The Veterans Entrepreneurship Act amends the Small Business 
Act of 1953 to prohibit the administrator of the Small Business 
Administration (SBA) from assessing a guarantee fee in 
connection with a loan made under the SBA Express Program to a 
veteran or spouse of a veteran beginning October 1, 2015. The 
bill also directs the Administrator to report to Congress on: 
(1) the feasibility of providing financial planning and 
counseling to owners of small business concerns who are members 
of a reserve component prior to deployment; (2) the level of 
outreach to and consultation with female veterans by women's 
business centers and veterans business outreach centers; and 
(3) the Military Reservists Economic Injury Disaster Loan 
Program, which shall include a discussion of SBA outreach 
efforts to increase participation, the number of loans made, 
and an analysis of the effectiveness of, and recommendations 
for improving, the Program.
    During the markup of the bill, the bill was approved 
unanimously by voice vote.

              II. HISTORY (PURPOSE & NEED FOR LEGISLATION)

    According to the Congressional Research Service (CRS), 
veteran unemployment as of February 2016 stood at 4.1 percent, 
lower than for nonveterans who are 18 or above, which stood at 
5.1 percent.\1\ Unemployment amongst veterans who have left the 
armed forces since late 2001 is 4.7 percent, higher than the 
above-referenced figure of 4.1 percent for all veterans. Given 
the high number of veterans returning from overseas service 
over the last decade, Congress has shown substantial interest 
in assisting those veterans as they look to re-enter civilian 
life. While Congress's engagement spans a broad range of 
veterans' assistance, this Committee has been focused on 
removing barriers for veterans interested in building and 
expanding small businesses. Congress has worked closely with 
the Small Business Administration to establish, fund and 
conduct oversight of a number of SBA programs that support 
veterans engaged in small business ventures. One of those 
programs is SBA Express, which makes loans of up to $350,000 
available to borrowers, and features an expedited timeline for 
SBA review of applications. In recent years, Congress has heard 
from a variety of stakeholders about impediments faced by 
veterans seeking access to SBA programs. On January 1, 2014, 
SBA announced a simplified, streamlined application process for 
loans under the 7(a) program of less than $350,000. One of 
those barriers is the requirement that borrowers under the 7(a) 
program pay upfront fees to receive a loan. That requirement 
has repeatedly been identified by applicants and veterans 
advocates as an obstacle for veterans who desire to start a 
small business. SBA has used its authority to waive these fees, 
as a component of the agency's efforts to expand veterans' 
access to federal assistance for starting and operating a small 
business, but Congress and stakeholders have continued efforts 
to make the fee waivers permanent.
---------------------------------------------------------------------------
    \1\SBA Veterans Assistance Programs: An Analysis of Contemporary 
Issues. Congressional Research Service, Dilger, Robert Jay and Lowry, 
Sean. R42695. March 10, 2016.
---------------------------------------------------------------------------
    During the 113th Congress, S. 2143, the Veterans 
Entrepreneurship Act, would have authorized and made the 
Veterans Advantage Program's fee waiver permanent. P.L. 113-
235, the Consolidated and Further Continuing Appropriations 
Act, 2015, provided statutory authorization for the fee waiver 
for FY2015.
    During the 114th Congress, P.L. 114-38, the Veterans 
Entrepreneurship Act of 2015, authorized and made the SBA's 
current practice of waiving the SBAExpress loan program's one 
time, up-front guaranty fee for veterans (and their spouse) 
permanent beginning on or after October 1, 2015, except during 
any upcoming fiscal year for which the President's budget, 
submitted to Congress, includes a cost for the 7(a) program, in 
its entirety, that is above zero.\74\

                      III. HEARINGS & ROUNDTABLES

    In the 113th Congress:
    On June 4, 2014, the Committee held a hearing entitled 
``From Military Service to Small Business Owner: Supporting 
America's Veteran Entrepreneurs,'' chaired by Senator Cantwell, 
to discuss legislative proposals under consideration by the 
Committee in support of veterans entrepreneurship and small 
business ownership. During the hearing, witnesses discussed the 
obstacles facing transitioning service members, veterans and 
their spouses in starting and growing a small business. This 
included testimony as to the fees associated with certain SBA 
loan products and the need for additional access to capital. 
Specifically, witnesses expressed support for Senator Shaheen's 
Veterans Entrepreneurship Act (S. 2143), which would have 
permanently waived the fees on certain SBA loan products for 
service members, veterans, or their spouse.

                        IV. DESCRIPTION OF BILL

    Amends the Small Business Act to prohibit the Administrator 
of the Small Business Administration (SBA) from assessing a 
guarantee fee in connection with a loan made under the SBA 
Express Program to a veteran or spouse of a veteran on or after 
October 1, 2015.
    Directs the Administrator to report to Congress on: (1) the 
feasibility of providing financial planning and counseling to 
owners of small business concerns who are members of a reserve 
component prior to deployment; (2) the level of outreach to and 
consultation with female veterans by women's business centers 
and veterans business outreach centers; and (3) the Military 
Reservists Economic Injury Disaster Loan Program, which shall 
include a discussion of SBA outreach efforts to increase 
participation, the number of loans made, and an analysis of the 
effectiveness of, and recommendations for improving, the 
Program.

                           V. COMMITTEE VOTE

    In compliance with rule XXVI (7)(b) of the Standing Rules 
of the Senate, the following vote was recorded on April 23, 
2015.
    A motion to adopt the Veterans Entrepreneurship Act, a bill 
to increase access to capital for veteran entrepreneurs to help 
create jobs, was approved unanimously by voice vote with the 
following Senators present: Senators Vitter, Risch, Fischer, 
Gardner, Ernst, Ayotte, Enzi, Shaheen, Cantwell, Cardin, 
Heitkamp, Booker, Coons, Hirono, and Peters.

                           VI. COST ESTIMATE

    In compliance with rule XXVI (11)(a)(1) of the Standing 
Rules of the Senate, the Committee estimates the cost of the 
legislation will be equal to the amounts discussed in the 
following letter from the Congressional Budget Office:

                                     U.S. Congress,
                               Congressional Budget Office,
                                      Washington, DC, May 28, 2015.
Hon. David Vitter,
Chairman, Committee on Small Business and Entrepreneurship,
U.S. Senate, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for S. 957, the Veterans 
Entrepreneurship Act.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Kim Cawley.
            Sincerely,
                                                        Keith Hall.
    Enclosure.

S. 957--Veterans Entrepreneurship Act

    Under current law, the Small Business Administration (SBA) 
waives payment of a guarantee fee for certain loans made under 
the agency's 7(a) loan guarantee program to veterans, military 
reservists, and their spouses that operate small businesses. S. 
957 would make this pilot program permanent. The bill also 
would direct the agency to provide three reports to the 
Congress on matters related to the SBA's services to veterans 
and military reservists.
    In fiscal year 2015, the subsidy cost for the SBA's 7(a) 
program, that is, the estimated long-term cost to the 
government for loan guarantees calculated on a net-present-
value basis, is zero. Based on information from the SBA, CBO 
expects that extending the program to waive fees for certain 
7(a) loans to veterans would not affect the program's subsidy 
cost because the agency has discretion to adjust other fees 
authorized under the program to maintain an overall subsidy 
rate for the program of zero. CBO estimates that implementing 
S. 957 would have an insignificant effect on discretionary 
costs to meet the reporting requirements under the bill. 
Enacting S. 957 would not affect direct spending or revenues; 
therefore, pay-as-you-go procedures do not apply.
    S. 957 contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act and 
would not affect the budgets of state, local, or tribal 
governments.
    The CBO staff contact for this estimate is Kim Cawley. The 
estimate was approved by Theresa Gullo, Assistant Director for 
Budget Analysis.

                  VII. EVALUATION OF REGULATORY IMPACT

    In compliance with rule XXVI (11)(b) of the Standing Rules 
of the Senate, it is the opinion of the Committee that no 
significant additional regulatory impact will be incurred in 
carrying out the provisions of this legislation. There will be 
no additional impact on the personal privacy of companies or 
individuals who utilize the services provided.

                   VIII. SECTION-BY-SECTION ANALYSIS

    Sec. 1. Short title--Creates a short title, the Veterans 
Entrepreneurship Act.
    Sec. 2. Definitions--Defines terms used throughout the 
bill.
    Sec. 3. Permanent SBA Express Loan Guarantee Fee Waiver for 
Veterans--Congress codified a fee waiver for veteran owned 
small business for FY2015 as part of the FY15 Omnibus 
Appropriations Act, P.L. 113-235. The SBA Express loan program 
provides streamlined loan approvals for both banks and small 
businesses. The SBA is currently waiving fees for veteran-owned 
small businesses on Express loans between $150,000 and $350,000 
for FY15 (which are typically 3 percent of the loan). The 
Veterans Express Loan fee waiver builds on the SBA's waiver of 
both borrower and lender fees on non-Express loans of $150,000 
and less.
    The bill would make this fee waiver permanent, which will 
make it easier for veteran-owned businesses to get access to 
credit. SBA guarantee fees, which are calculated as a 
percentage of the loan based on maturity and loan value, 
typically cost borrowers thousands of dollars. Providing 
additional fee waivers for veteran-owned small businesses is a 
simple and effective way of supporting veteran 
entrepreneurship.
    Sec. 4. Report on Financial Planning and Counseling for 
Owners of Small Business Concerns in the National Guard and 
Reserve--Requires SBA to study the feasibility of offering 
National Guard and Reservist small business owners financial 
planning and counseling prior to deployment. Pre-deployment 
training could potentially address many problems before they 
arise, which would save money for both the veteran and the tax 
payer.
    Sec. 5. Report on Accessibility and Outreach to Female 
Veterans by the Small Business Administration--This provision 
requires the SBA to conduct a comprehensive review and make 
recommendations to improve its outreach and services for female 
veterans, particularly by its Women Business Centers and 
Veteran Business Outreach Centers.
    Sec. 6. Report on the Military Reservists Economic Injury 
Disaster Loan Program--SBA's Military Reservists Economic 
Injury Disaster Loan (MREIDL) Program provides disaster 
assistance in the form of direct loans of up to $2 million to 
help small business owners who are not able to obtain credit 
elsewhere because an essential employee has been called-up to 
active duty in their role as a military reservist or member of 
the National Guard due to a period of military conflict. The 
Veterans Entrepreneurship Act requires the SBA to report to 
Congress on how this program is administered and ways to 
address program outreach, utilization, and effectiveness.

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