These Are the Best States for Veterans Who Want to Start a Business

Our returning service men and women can take advantage of tax credits, loan help, and more.

(Photo: Daniel Bendjy/Getty Images)

May 25, 2014· 2 MIN READ
Melissa Rayworth is a regular contributor to TakePart. She has also written for the Associated Press, Salon and Babble.

It all started in California. In 1989, a new law was passed giving 3 percent of all state government contracts to businesses owned by disabled American military veterans.

The idea, promoted by the fledgling National Veteran-Owned Business Association, was simple: Every state has programs designed to help small business owners. Some offer support to minority-owned businesses or women-owned businesses. Shouldn’t people who were disabled in training or battle to serve our country get the same boost when they launch a business?

You might expect that idea to take off across the country. But it’s been slow going ever since, says Matthew Pavelek, director of communications for NaVOBA and a U.S. Army veteran.

It took another decade before the federal government stepped up with the Veterans Entrepreneurship and Small Business Development Act of 1999, which is similar to California’s law. Since then just over half the states—28 out of 50—have developed their own ways to assist veteran-owned businesses. But only a handful have passed laws that have a solid impact on small businesses. Check to see if your state is one of them.

Here are some of the states with the best laws.

California: The state’s 1989 law set a goal of offering 3 percent of contracts to service-disabled veteran business owners. In 2007, an additional ruling was passed to hold state agencies accountable for reaching that goal. It also offers “price preferences,” meaning that a contract bid by a veteran won’t be rejected even if it’s slightly higher than a competing bid from a non-veteran owned business.

Arkansas: This state’s law builds on California’s by setting a goal of offering 5 percent of contracts to veteran-owned businesses. An additional law later amended the state’s Minority Business Enterprise program to include veteran business owners in that program as well.

Illinois: This state aims to set aside 5 percent of each year’s spending for contracts to veteran-owned small businesses. State agencies are required to appoint advocates to help veteran-owned small businesses apply for those contracts.

Indiana: This law requires the state to give at least 3 percent of state contracts to veteran-owned small businesses—whether those business-owners are service-disabled or not.

Michigan: Michigan started in 2005 with a goal of 3 percent; additional legislation in 2008 bumped that up to 5 percent. This state also offers a whopping price preference—a veteran-owned business can bid up to 10 percent higher than a non-veteran business and still not be perceived as too pricey for consideration.

Maryland: This state offers price preferences to veteran business owners and no-interest loans to veterans and those serving in the Reserves.

New York: On May 12 the state passed a law with a goal of awarding 6 percent of spending to veteran entrepreneurs.

Lobbying to get similar laws in place is under way in many other states. But the next step—and perhaps the most imporant one—is motivating individual cities and even small municipalities to create their own programs for veteran-owned businesses.

Some cities and localities have already stepped up: Indianapolis, Las Vegas, and Orange County, Fla., all have veteran business–friendly programs. In the end, these may be more important than state-spending policies. Pavelek points out that many veterans own small businesses with just a handful of employees. They may not be large enough to bid for huge state contracts, but they’d love to win the kind of local contracts city hall offers.

How can you help? Reach out to your local city council members, Pavelek says. Tell them why this matters, and ask them to sponsor a local piece of legislation.

If you’d like to seek out and support veteran-owned businesses, visit buyveteran.com to find listings for thousands of small businesses owned by people who have served our nation.