Veterans nab business benefits

Veteran Derryl Caldwell is welcomed by Navy Adm Mike Mullen, chairman of the Joint Chiefs of Staff
Veteran Derryl Caldwell of DC Mad Hatter is greeted by Navy Adm Mike Mullen, chairman of the Joint Chiefs of Staff; Photo by Miguel Zuno, courtesy of the SBA

Chicago business owner Derryl Caldwell credits his status as a veteran for helping his company weather the recession.

Caldwell, a reservist with the Army National Guard for 9 years who has owned apparel merchandising company DC Mad Hatter at Navy Pier since 1996, said he gets special attention from the U.S. Small Business Administration. “As a veteran in the military, I’ve been able to use the benefits to help me and the community,” he said.

Patriot loans for veterans

In May, when credit was tight all over, Caldwell received a $50,000 line of credit through the SBA’s Patriot Express loan program for veterans. He also nabbed a $50,000 government order to produce 6,000 to 8,000 hats for the Census Bureau last year, which kept DC Mad Hatter going as the down economy dampened sales to tourists.

“I had prepared for six months of bad business, not 36 months,” Caldwell said, referring to the economy’s impact. The government job “gave me a cash infusion to keep people employed.” Caldwell currently employs two workers but often adds five or six more during the busy summer months.

Most recently, Caldwell graduated from the SBA’s Emerging 200 class that’s designed like a mini-MBA program. Armed with a whole toolbox of new marketing, management and finance skills, Caldwell hopes to build his business and hire more workers.    “I’m looking at bidding to get some government contracts,” he said.

One in four want to start businesses

The Small Business Administration recognizes that veterans are disproportionately likely to start businesses and reaches out to help them succeed, said U.S. SBA Administrator Karen Mills. One in seven veterans are business owners or self-employed, while fully 25 percent express interest in starting a business. “Veterans over-index in being entrepreneurial and owning small businesses, in large part because of all the leadership skills they gain,” Mills said.

To ensure they have every opportunity to succeed, the SBA offers special loan programs and educational sessions for veterans, Mills said. “We owe it to them to help them create a path to move forward through entrepreneurship,” she said.

In the fiscal year ended Sept. 30, 2010, the SBA supported 5,000 Patriot Express loans totaling $1.25 billion to veterans, Mills said. The Patriot loans currently carry a 90 percent government guarantee because of    the Small Business Jobs Act, but the government usually guarantees 75 to 80 percent of the loan amount, compared with 50 percent for a regular Express loan, said Judith Roussel, district director for SBA’s Chicago District office.

Being a veteran doesn’t guarantee a business owner will get a Patriot loan, as veteran John LeStarge, who launched Chicago Electric Bikes after serving in Afghanistan, can attest. He was turned down for a    Patriot loan before finally getting a regular small business loan from Citibank    to start the business making electric bikes, he said. (See related story in the archive section of

Roussel said the same criteria applies when seeking a Patriot loan as for any other SBA loan. Banks look for cash flow, a track record of success, good credit and character.

Counseling and contracts

But besides loans, the SBA counsels veterans on special set-aside and sole-source government contracts that might be available, particularly to disabled vets, Roussel said. “We can get them assistance even if it’s just exploring the idea (of starting a business) and letting them know what programs are available,” she said.

Veteran Robert Carmody, president of Diana’s Banana Inc., said he appreciated the SBA’s assistance in securing a $2 million loan earlier this year that allowed him to buy a new factory and equipment to expand his chocolate-covered frozen banana manufacturing business. Carmody said friends told him that he was brave to take on such a large expansion, but he partly credits his three years in the Army from 1968 to 1971 with his confidence. “I see it as no big deal,” he said. “It’s just one step at a time.”

Military service provides many intangibles that lead to business success, such as an understanding of organizational structure, communication and a sense of purpose, Carmody said. “The military teaches people a personal discipline.    You gain a great sense of personal confidence,” he said. “You know you can pull something off and have the strength of character to see it through.”