A loan program designed to assist veterans who are interested in starting a businesses has seen a default rate that is 75% higher than other like-programs, according to the Small Business Administration’s own numbers.
Patriot Express is the name of the program that was launched in 2007 by the Small Business Administration. The program offered loans of up to a half-million dollars. It also reviewed applications within 36 hours, which is much faster than the standard business loans programs. The SBA reimburses banks for as much as 85% of the loan.
“Patriot Express was done because there were a lot of veterans coming back,” said Robert Blaney, SBA district director in Arizona and member of a Patriot Express advisory board in 2006 as the program was being developed. “If somebody has been shot at in anger, it’s good that they get an extra benefit.”
Nearly one-in-nine of the Patriot Express loans has now failed since 2008, and that tally has cost the taxpayers $48 million in support to banks, according to to the SBA’s numbers. A 7.8% of the total loan money is defaulted on, which exceeds the 4.5% rate that is lost in other SBA loans programs.
Mark Proden owns Bodhichitta Winery in Salem, Oregon. A now inactive Air Force Veteran, he obtained a $35,000 Patriot Express loan in 2010 in order to start his business.
“For me, I enjoy the creativity and the flexibility to create your own world,” he said. During 11 years, he served as a pilot and an engineer. “I worked as a program manager in the military, though it’s always different when you’re managing your own money compared to somebody else’s.”
Entrepreneurship is common among veterans, according to SBA numbers. In 2001, a report showed that 16% of veterans were self-employed. That is nearly three times the overall population total, which stands at 6%.
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