By Jason Stverak
As America celebrates National Small Business Week 2025 (May 4–10), we honor the ingenuity and hard work of entrepreneurs who drive our economy. Among them are thousands of military veterans who have traded uniforms for business plans.
These veterans have already served our nation; now they seek to serve our communities as small business owners. Yet after putting their lives on the line for our country, many veteran entrepreneurs face a new battle on the homefront – an uphill battle for the capital needed to start and grow their businesses. Congress now has a chance to honor their service in a tangible way: by passing the bipartisan Veterans Member Business Loan Act, a common-sense bill that will open doors for veteran-owned small businesses.
Veterans’ Entrepreneurial Spirit And Economic Contribution
Veterans make outstanding entrepreneurs. The same resilience, discipline, and leadership that define military service translate into business success. It’s no surprise that veterans own nearly two million businesses in America, employing over five million people and generating $1.3 trillion in annual sales. In fact, veteran-owned firms make up almost one in every ten U.S. small businesses, creating jobs and opportunities in communities nationwide. Through business ownership, our veterans continue to serve our country – boosting the economy and mentoring the next generation of entrepreneurs.
However, veteran-owned businesses could contribute even more if they weren’t facing extra obstacles that other entrepreneurs might not. As we salute their achievements during National Small Business Week, we must also confront the reality that far too many veterans struggle to access financing for their ventures. Honoring their service means little if we ignore the barriers that hold back their economic potential.
The Uphill Battle For Capital
Despite their skills and dedication, veteran entrepreneurs often find the deck stacked against them when seeking loans or investment. Veteran-owned firms are more likely to be denied the full financing they seek and often must drain personal savings to stay afloat – indeed, 72% of veteran business owners use personal savings to fund their companies (compared to 62% of non-veteran entrepreneurs). It’s no wonder that three out of four veterans report that access to capital is a top challenge when starting or growing a business. These are hardworking men and women with the talent to succeed, but our financial system isn’t fully working for them.
Research confirms this troubling trend. A joint study by the U.S. Small Business Administration and the Federal Reserve Bank of New York found that veteran business owners face higher loan denial rates than non-veterans, even when they apply more often and request larger amounts. In other words, the very people who sacrificed for our security are at a disadvantage in securing credit for their startups. This “second battle” for capital is one our veterans should not have to fight alone.
An Outdated Law Holds Back Veteran Businesses
One big reason for the credit gap is an outdated federal regulation that limits whom veterans can turn to for help. By law, credit unions face a cap on member business lending (MBL) – a cap first imposed in 1998 that arbitrarily restricts the volume of business loans a credit union can make relative to its assets. In theory, this cap was meant to prevent excessive commercial lending by credit unions. In practice, it has become a barrier preventing veteran-owned businesses from getting financing from the very lenders most attuned to their needs. Loans made to veteran entrepreneurs count against this cap, which means even a mission-driven defense credit union might have to turn away a qualified veteran borrower simply because an artificial threshold has been reached.
This makes little sense, especially today. Banks have no similar legal cap on small business lending, yet credit unions – including many on military bases or serving veteran communities – are handcuffed by this limitation. Credit unions are often the first and only place many veterans turn after facing denials from traditional banks. Why? Because defense credit unions understand their members’ service, sacrifice, and unique financial journeys. They’ve stood by our servicemembers through deployments and homecomings; they know how to underwrite loans that work for military families. It is ironic and unfair that just when a veteran business owner finds a willing partner in a credit union, an old law slams the door on that opportunity.
A Bipartisan Bill To Open Doors For Veteran Entrepreneurs
Fortunately, Congress is now considering a fix. The Veterans Member Business Loan Act (VMBLA) is a bipartisan, bicameral effort to remove these arbitrary lending caps and unleash more capital for veteran-owned small businesses. This bill would amend the Federal Credit Union Act to exclude loans made to veterans and active-duty service members from the definition of a “member business loan” . In plain English, that means loans to veteran entrepreneurs would no longer count against the cap that limits credit union business lending. By freeing up credit unions to do more, the legislation directly expands access to affordable credit for veterans looking to start or grow a company.
Crucially, this reform comes at no cost to taxpayers or government programs. It simply lifts a regulatory barrier and lets financial cooperatives do what they do best: lend to members in need. “Removal of the cap would provide additional economic stimulus without costing taxpayer dollars,” the Defense Credit Union Council noted in its testimony supporting the bill. In other words, this is a market-based solution that can fuel veteran entrepreneurship without a dime of public spending – a win-win for vets and the economy. Credit unions remain financially sound and committed to helping America’s small businesses while maintaining safe lending practices, so we can expand veteran credit responsibly.
It’s also hard to find a proposal more deserving of bipartisan support. In fact, the VMBL Act is championed by an uncommon coalition: Republicans and Democrats in both the House and Senate. The prime sponsors – Senators Mazie Hirono (D-HI) and Dan Sullivan (R-AK) alongside Representatives Vicente Gonzalez (D-TX) and Brian Fitzpatrick (R-PA) – have rallied colleagues from both parties behind this cause. Already, over 20 members of Congress have signed on as co-sponsors of this effort. At a time when Washington is often divided, the push to empower veteran small business owners has united lawmakers across the aisle. They recognize that helping veterans become successful entrepreneurs isn’t a partisan issue – it’s an American issue.
Credit Unions Stand Ready To Help
Passing the veterans lending bill would immediately unlock new financing for those who have served. America’s credit unions – particularly defense credit unions that serve military bases and veteran families – are eager to step up. These member-owned, not-for-profit institutions were created to serve people of modest means and community needs. “Credit unions are uniquely positioned to serve veterans as they work to start small businesses as they transition to the private sector,” DCUC wrote to Congress. Many veterans transitioning out of uniform dream of launching a startup or franchise. Their credit union should be an ally in that dream, not constrained by an irrelevant cap from decades past.
By lifting the cap, Congress would empower credit unions to fill the financing gap left by traditional banks. Remember, big banks often decline veteran loan applications at higher rates, leaving veterans stuck without options. Credit unions can be the solution: institutions with a mission to serve the community, willing to underwrite smaller loans or work with borrowers whose circumstances might be outside the mainstream. DCUC and its member credit unions have been advocating for this change for years, highlighting the clear need and the fairness of the approach. Now, with bipartisan momentum in Congress, we are closer than ever to making it a reality.
Honor Their Service With Action
Our veterans donned the uniform to defend the American dream. Helping them achieve the American dream of business ownership is a fitting way to honor that service. The Veterans Member Business Loan Act offers a chance to do exactly that. By removing an outdated restriction and allowing more lending, we can pave the way for veteran-owned businesses to flourish – creating jobs, strengthening communities, and driving innovation across America . This is not just about financial regulations; it’s about keeping our promise to those who kept us safe, by giving them a fair shot in their civilian endeavors.
During this National Small Business Week, as we celebrate entrepreneurs nationwide, let’s commit to real support for the veterans in our entrepreneurial ranks. Congress should swiftly pass the Veterans MBL bill and send it to the President’s desk. In doing so, we will unlock millions in capital for veteran-owned small businesses, fuel economic growth, and uphold the principle that no one who served this nation should have to fight for opportunity when they come home. Our veteran entrepreneurs have earned the chance to compete and succeed – now it’s time to open the door for them. This bipartisan bill is an investment in our veterans and in the future they are ready to build. Let’s get it done.
Jason Stverak is Chief Advocacy Officer at the Defense Credit Union Council.