To direct the Secretary of Veterans Affairs to establish a program under which certain veterans entitled to educational assistance under the laws administered by the Secretary can use such entitlement to start or purchase a qualifying business enterprise, and for other purposes.

Summary: Veterans Entrepreneurial Transition Act of 2011 or the VET Act of 2011 - Directs the Secretary of Veterans Affairs (VA) to establish a veterans small business entrepreneurship program under which the Secretary may approve an eligible veteran entitled to certain VA educational assistance (under the all-volunteer force or post-9/11 educational assistance programs) to use up to a specified amount of such entitlements to start or acquire a qualifying business enterprise.

Limits eligibility for the program to veterans who: (1) have completed at least 36 months of full-time active duty service in the Armed Forces or 24 months of such service before being discharged or separated for a service-connected disability, (2) are entitled to 36 months of such educational assistance, and (3) has last been discharged or separated from active duty service a maximum of 15 years before submitting an application with specified information.

Allows a participating veteran to use program benefits, in accordance with limitations the Secretary establishes by rule, for purposes related to starting or acquiring a qualifying business enterprise, including: (1) purchasing goods or services necessary for the operation, expansion, or startup of such an enterprise; (2) funding a project directed toward any economic development objective described under specified provisions of the Small Business Investment Act of 1958; (3) attending an entrepreneurship readiness program to prepare the veteran for, and lead to the immediate subsequent ownership and management by the veteran of, such an enterprise; and (4) acquiring such an enterprise.

Directs the Secretary to establish a list of qualifying business enterprise categories including: (1) small businesses, (2) franchise business enterprises, (3) existing business enterprises in which the veteran has an ownership stake, and (4) any other business enterprise determined appropriate by the Secretary.

Requires that benefits made available to veterans under the program be taken into account in determining a veteran's creditworthiness for small business loans guaranteed under the Small Business Act and for farm loans made or guaranteed pursuant to the Consolidated Farm and Rural Development Act.

Authorizes the Secretary, in the event a veteran dies before receiving the balance of benefits payable under this Act, to pay the approved benefits to a survivor designated by the veteran under specified circumstances.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Veterans Entrepreneurial Transition 
Act of 2011'' or the ``VET Act of 2011''.

SEC. 2. ESTABLISHMENT OF SMALL BUSINESS PROGRAM.

    The Secretary of Veterans Affairs shall establish a program under 
which the Secretary shall allow eligible veterans to participate in the 
program described under section 3.

SEC. 3. VETERANS SMALL BUSINESS ENTREPRENEURSHIP PROGRAM.

    (a) Establishment.--The Secretary of Veterans Affairs shall, in 
consultation with the Administrator of the Small Business 
Administration, establish a program (hereinafter in this Act referred 
to as ``the Program'') under which the Secretary may approve an 
eligible veteran to use Program benefits to start or acquire a 
qualifying business enterprise.
    (b) Amount and Payment of Benefits.--
            (1) In general.--Under the Program, the Secretary shall 
        provide for an eligible veteran to use the veteran's 
        entitlement to educational assistance under chapter 30 or 33 of 
        title 38, United States Code, in accordance with this Act.
            (2) Amount.--
                    (A) In general.--The maximum amount of benefits 
                made available to a veteran under the Program shall not 
                exceed the maximum value of--
                            (i) in the case of a veteran entitled to 
                        educational assistance under chapter 33 of 
                        title 38, United States Code, the amount equal 
                        to 36 months of educational assistance at the 
                        rate in effect under section 3313(c)(ii)(II) of 
                        such title; and
                            (ii) in the case of a veteran entitled to 
                        educational assistance under chapter 30 of such 
                        title, the amount equal to 36 months of 
                        educational assistance at the rate in effect 
                        under section 3015(a)(1) of such title.
                    (B) Charge to entitlement.--A veteran who receives 
                a payment under the Program shall be charged for 36 
                months of the veteran's entitlement to educational 
                assistance under chapter 30 or 33 of title 38, United 
                States Code.
            (3) Payment.--Payments to eligible veterans under the 
        Program shall be made as follows:
                    (A) In the case of a veteran who is using the funds 
                to start a new business enterprise, payment shall be 
                made in not less than two lump-sum amounts, the first 
                of which shall not exceed $2,500, to be used for the 
                development of the business plan, and the balance to be 
                paid upon the approval of the business plan.
                    (B) In the case of a veteran who is using the funds 
                to purchase an existing business enterprise or 
                franchise business enterprise, payment shall be made in 
                one lump-sum amount.
                    (C) In the case of a veteran who is using the funds 
                to purchase capital equipment, durable expense items, 
                or professional services that the Secretary determines 
                are essential to operating a qualifying business, 
                payment shall be made in one or more lump-sum amounts.
    (c) Eligibility.--An individual shall be an eligible veteran for 
purposes of the Program if that individual--
            (1) is a veteran;
            (2) has completed at least--
                    (A) 36 months of full-time active duty service in 
                the Armed Forces; or
                    (B) 24 months of full-time active duty service in 
                the Armed Forces before being discharged or separated 
                for a service-connected disability, as that term is 
                defined in section 101 of title 38, United States Code;
            (3) is entitled to 36 months of educational assistance 
        under chapter 30 or 33 of title 38, United States Code;
            (4) has last been discharged or separated from active duty 
        service in the Armed Forces not more than 15 years before 
        submitting an application to participate in the Program; and
            (5) submits to the Secretary an application, in such form 
        and containing such information as the Secretary may require, 
        including the information described in subsection (f).
    (d) Use of Program Benefits.--An eligible veteran participating in 
the Program may use the Program benefits--
            (1) in accordance with such limitations as the Secretary, 
        in consultation with the Administrator, may by rule establish; 
        and
            (2) for such purposes related to starting or acquiring a 
        qualifying business enterprise as the Secretary, in 
        consultation with the Administrator, determines appropriate, 
        including--
                    (A) purchasing goods or services necessary for the 
                operation, expansion, or startup of a qualifying 
                business enterprise;
                    (B) funding a project that is directed toward any 
                economic development objective described under section 
                501(d) of the Small Business Investment Act of 1958;
                    (C) attending an entrepreneurship readiness program 
                approved by the Secretary and designed to prepare the 
                veteran for, and lead to the immediate subsequent 
                ownership and management by the veteran of, a 
                qualifying business enterprise; and
                    (D) acquiring a qualifying business enterprise.
    (e) Qualifying Business Enterprises.--The Secretary, in 
consultation with the Administrator, shall by rule establish a list of 
categories of business enterprises that the Secretary determines to be 
``qualifying business enterprises'' for purposes of the Program, 
including the following:
            (1) A small business concern (as such term is defined in 
        section 3(a) of the Small Business Act).
            (2) Franchise business enterprises.
            (3) Existing business enterprises in which the eligible 
        veteran has an ownership stake.
            (4) Any other business enterprise the Secretary, in 
        consultation with the Administrator, determines appropriate and 
        in accordance with the purposes of the Program.
    (f) Documentation Requirements.--The Secretary, in considering an 
application from an eligible veteran, may not approve that application 
unless that application includes the following:
            (1) A description of the use of the Program benefits, 
        including an identification and description of the qualifying 
        business enterprise.
            (2) A certification that the eligible veteran applying to 
        participate in the Program shall complete such education and 
        training relevant to the ownership and operation of the 
        qualifying business enterprise as the Secretary determines 
        appropriate, including, in the case of a startup, a Small 
        Business Development Center program (as described in section 21 
        of the Small Business Act) designed to result in the completion 
        of a business plan for the qualifying business enterprise.
            (3) With regard to each category of qualifying business 
        enterprise (as established in the list described in subsection 
        (e)), such certifications as the Secretary, in consultation 
        with the Administrator, shall by rule require, including--
                    (A) in the case of a business enterprise already in 
                operation at the time of the application, such evidence 
                as the Secretary, in consultation with the 
                Administrator, determines appropriate of--
                            (i) good standing;
                            (ii) profitable operation; and
                            (iii) guarantees pertaining to the purchase 
                        of the enterprise;
                    (B) in the case of a franchise business enterprise, 
                such evidence as the Secretary, in consultation with 
                the Administrator, determines appropriate of--
                            (i) compliance with applicable State and 
                        Federal laws on franchises;
                            (ii) training in conformation with the 
                        industry standard; and
                            (iii) an acceptably low loan failure rate 
                        of similarly situated business enterprises for 
                        loans guaranteed under the Small Business Act; 
                        and
                    (C) in the case of a business enterprise that is a 
                startup, or that is otherwise not in operation at the 
                time of the application--
                            (i) a business plan for the operation of 
                        that enterprise, prepared with the assistance 
                        of any agency that the Secretary determines 
                        appropriate, that leads to profitable operation 
                        within a reasonable time frame, and that 
                        includes such other information as the 
                        Secretary, in consultation with the 
                        Administrator, determines appropriate; or
                            (ii) a business plan approved by a person 
                        designated by the Secretary, in consultation 
                        with the Administrator, from among--
                                    (I) any department or agency of the 
                                Federal government;
                                    (II) an institution or higher 
                                learning; or
                                    (III) a non profit enterprise.

SEC. 4. USE OF BENEFITS IN QUALIFYING FOR SMALL BUSINESS LOANS AND FARM 
              LOAN.

    (a) Small Business Loans.--In determining the creditworthiness of a 
veteran for a loan guaranteed by the Administrator under the Small 
Business Act, all benefits made available to the veteran under the 
program established under section 3 shall be taken into account.
    (b) Farm Loans.--In determining the creditworthiness of a veteran 
for a loan made or guaranteed pursuant to the Consolidated Farm and 
Rural Development Act, the Secretary of Agriculture shall take into 
account all benefits made available to the veteran under the program 
established under section 3.

SEC. 5. SURVIVORS' BENEFITS.

    (a) In General.--In the event that a veteran who has received more 
than $2,500 in benefits under this Act dies before receiving the 
balance of any benefits payable to the veteran under this Act, the 
Secretary may pay any benefits approved to be paid to the veteran to a 
survivor of the veteran who is designated by the veteran for such 
purpose.
    (b) Limitation on Survivor Eligibility.--To be eligible to be a 
survivor of a veteran for purposes of this section, an individual must 
be at least 18 years of age at the time of death of the veteran and 
must have inherited the business from the veteran at the time of the 
veteran's death.
    (c) Period of Survivor Eligibility.--The period during which a 
survivor of a veteran is eligible to receive benefits under this 
section is the greater of--
            (1) the five-year period beginning on the date of the 
        veteran's death; or
            (2) the period beginning on the date of the veteran's death 
        and ending upon the termination of the longest term of any 
        business loan obtained by the veteran before the veteran's 
        death for the business enterprise for which the veteran 
        received benefits under this Act.
    (d) Limitation on Use of Funds To Secure Loans.--A survivor of a 
veteran who receives benefits under this section may not use the 
benefits to secure any new loan.
    (e) Duplication of Benefits.--If the survivor of a veteran who 
receives benefits under this section is also eligible to receive 
benefits under section 3, the survivor may not use benefits payable 
under section 3 for a business enterprise other than the business 
enterprise for which the veteran receives benefits under this section. 
The survivor may use benefit payable to the survivor under section 3 to 
affect the transfer into the survivor's name of 100 percent of the 
assets, liabilities, and operations of the business enterprise for 
which the veteran receives benefits under this section.

SEC. 6. DEFINITIONS.

    In this Act:
            (1) The term ``Secretary'' means the Secretary of Veterans 
        Affairs.
            (2) The term ``Administrator'' means the Administrator of 
        the Small Business Administration.
            (3) The term ``veteran'' has the meaning given that term in 
        section 101 of title 38, United States Code.
            (4) The term ``institution of higher learning'' has the 
        meaning given such term in 3452(f) of title 38, United States 
        Code.
            (5) The term ``Program benefits'' means payments described 
        in section 3.
            (6) The term ``franchise business enterprise'' means any 
        continuing commercial relationship or arrangement, whatever it 
        may be called, in which the terms of the offer or contract 
        specify, or the franchise seller promises or represents, orally 
        or in writing, that--
                    (A) the franchisee will obtain the right to operate 
                a business that is identified or associated with the 
                franchisor's trademark, or to offer, sell, or 
                distribute goods, services, or commodities that are 
                identified or associated with the franchisor's 
                trademark;
                    (B) the franchisor will exert or has authority to 
                exert a significant degree of control over the 
                franchisee's method of operation, or provide 
                significant assistance in the franchisee's method of 
                operation; and
                    (C) as a condition of obtaining or commencing 
                operation of the franchise business enterprise, the 
                franchisee makes a required payment or commits to make 
                a required payment to the franchisor or its affiliate.
            (7) The term ``franchisee'' means any person who is granted 
        a franchise business enterprise.
            (8) The term ``franchisor'' means any person who grants a 
        franchise business enterprise and participates in the franchise 
        relationship. Unless otherwise stated, such term includes 
        subfranchisors.
            (9) The term ``subfranchisor'' means a person who functions 
        as a franchisor by engaging in both pre-sale activities and 
        post-sale performance.

SEC. 7. EFFECTIVE DATE.

    This Act shall take effect on the date that is one year after the 
date of the enactment of this Act.