I 

112TH CONGRESS 

1ST SESSION H. R. 3167 

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. 

IN THE HOUSE OF REPRESENTATIVES 

OCTOBER 12, 2011 

Mr. FORTENBERRY introduced the following bill; which was referred to the 

Committee on Veterans’ Affairs, and in addition to the Committees on 

Small Business and Agriculture, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions 

as fall within the jurisdiction of the committee concerned 

A BILL 

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. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Veterans Entrepre5 neurial Transition Act of 2011’’ or the ‘‘VET Act of 

6 2011’’. 


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1 SEC. 2. ESTABLISHMENT OF SMALL BUSINESS PROGRAM. 

2 The Secretary of Veterans Affairs shall establish a 

3 program under which the Secretary shall allow eligible vet4 erans to participate in the program described under sec5 tion 3. 

6 SEC. 3. VETERANS SMALL BUSINESS ENTREPRENEURSHIP 

7 PROGRAM. 

8 (a) ESTABLISHMENT.—The Secretary of Veterans 

9 Affairs shall, in consultation with the Administrator of the 

10 Small Business Administration, establish a program (here11 inafter in this Act referred to as ‘‘the Program’’) under 

12 which the Secretary may approve an eligible veteran to 

13 use Program benefits to start or acquire a qualifying busi14 ness enterprise. 

15 (b) AMOUNT AND PAYMENT OF BENEFITS.— 

16 (1) IN GENERAL.—Under the Program, the 

17 Secretary shall provide for an eligible veteran to use 

18 the veteran’s entitlement to educational assistance 

19 under chapter 30 or 33 of title 38, United States 

20 Code, in accordance with this Act. 

21 (2) AMOUNT.— 

22 (A) IN GENERAL.—The maximum amount 

23 of benefits made available to a veteran under 

24 the Program shall not exceed the maximum 

25 value of— 


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1 (i) in the case of a veteran entitled to 

2 educational assistance under chapter 33 of 

3 title 38, United States Code, the amount 

4 equal to 36 months of educational assist5 ance at the rate in effect under section 

6 3313(c)(ii)(II) of such title; and 

7 (ii) in the case of a veteran entitled to 

8 educational assistance under chapter 30 of 

9 such title, the amount equal to 36 months 

10 of educational assistance at the rate in ef11 fect under section 3015(a)(1) of such title. 

12 (B) CHARGE TO ENTITLEMENT.—A vet13 eran who receives a payment under the Pro14 gram shall be charged for 36 months of the vet15 eran’s entitlement to educational assistance 

16 under chapter 30 or 33 of title 38, United 

17 States Code. 

18 (3) PAYMENT.—Payments to eligible veterans 

19 under the Program shall be made as follows: 

20 (A) In the case of a veteran who is using 

21 the funds to start a new business enterprise, 

22 payment shall be made in not less than two 

23 lump-sum amounts, the first of which shall not 

24 exceed $2,500, to be used for the development 


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1 of the business plan, and the balance to be paid 

2 upon the approval of the business plan. 

3 (B) In the case of a veteran who is using 

4 the funds to purchase an existing business en5 terprise or franchise business enterprise, pay6 ment shall be made in one lump-sum amount. 

7 (C) In the case of a veteran who is using 

8 the funds to purchase capital equipment, dura9 ble expense items, or professional services that 

10 the Secretary determines are essential to oper11 ating a qualifying business, payment shall be 

12 made in one or more lump-sum amounts. 

13 (c) ELIGIBILITY.—An individual shall be an eligible 

14 veteran for purposes of the Program if that individual— 

15 (1) is a veteran; 

16 (2) has completed at least— 

17 (A) 36 months of full-time active duty 

18 service in the Armed Forces; or 

19 (B) 24 months of full-time active duty 

20 service in the Armed Forces before being dis21 charged or separated for a service-connected 

22 disability, as that term is defined in section 101 

23 of title 38, United States Code; 


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1 (3) is entitled to 36 months of educational as2 sistance under chapter 30 or 33 of title 38, United 

3 States Code; 

4 (4) has last been discharged or separated from 

5 active duty service in the Armed Forces not more 

6 than 15 years before submitting an application to 

7 participate in the Program; and 

8 (5) submits to the Secretary an application, in 

9 such form and containing such information as the 

10 Secretary may require, including the information de11 scribed in subsection (f). 

12 (d) USE OF PROGRAM BENEFITS.—An eligible vet13 eran participating in the Program may use the Program 

14 benefits— 

15 (1) in accordance with such limitations as the 

16 Secretary, in consultation with the Administrator, 

17 may by rule establish; and 

18 (2) for such purposes related to starting or ac19 quiring a qualifying business enterprise as the Sec20 retary, in consultation with the Administrator, deter21 mines appropriate, including— 

22 (A) purchasing goods or services necessary 

23 for the operation, expansion, or startup of a 

24 qualifying business enterprise; 


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1 (B) funding a project that is directed to2 ward any economic development objective de3 scribed under section 501(d) of the Small Busi4 ness Investment Act of 1958; 

5 (C) attending an entrepreneurship readi6 ness program approved by the Secretary and 

7 designed to prepare the veteran for, and lead to 

8 the immediate subsequent ownership and man9 agement by the veteran of, a qualifying busi10 ness enterprise; and 

11 (D) acquiring a qualifying business enter12 prise. 

13 (e) QUALIFYING BUSINESS ENTERPRISES.—The Sec14 retary, in consultation with the Administrator, shall by 

15 rule establish a list of categories of business enterprises 

16 that the Secretary determines to be ‘‘qualifying business 

17 enterprises’’ for purposes of the Program, including the 

18 following: 

19 (1) A small business concern (as such term is 

20 defined in section 3(a) of the Small Business Act). 

21 (2) Franchise business enterprises. 

22 (3) Existing business enterprises in which the 

23 eligible veteran has an ownership stake. 

24 (4) Any other business enterprise the Secretary, 

25 in consultation with the Administrator, determines 


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1 appropriate and in accordance with the purposes of 

2 the Program. 

3 (f) DOCUMENTATION REQUIREMENTS.—The Sec4 retary, in considering an application from an eligible vet5 eran, may not approve that application unless that appli6 cation includes the following: 

7 (1) A description of the use of the Program 

8 benefits, including an identification and description 

9 of the qualifying business enterprise. 

10 (2) A certification that the eligible veteran ap11 plying to participate in the Program shall complete 

12 such education and training relevant to the owner13 ship and operation of the qualifying business enter14 prise as the Secretary determines appropriate, in15 cluding, in the case of a startup, a Small Business 

16 Development Center program (as described in sec17 tion 21 of the Small Business Act) designed to re18 sult in the completion of a business plan for the 

19 qualifying business enterprise. 

20 (3) With regard to each category of qualifying 

21 business enterprise (as established in the list de22 scribed in subsection (e)), such certifications as the 

23 Secretary, in consultation with the Administrator, 

24 shall by rule require, including— 


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1 (A) in the case of a business enterprise al2 ready in operation at the time of the applica3 tion, such evidence as the Secretary, in con4 sultation with the Administrator, determines 

5 appropriate of— 

6 (i) good standing; 

7 (ii) profitable operation; and 

8 (iii) guarantees pertaining to the pur9 chase of the enterprise; 

10 (B) in the case of a franchise business en11 terprise, such evidence as the Secretary, in con12 sultation with the Administrator, determines 

13 appropriate of— 

14 (i) compliance with applicable State 

15 and Federal laws on franchises; 

16 (ii) training in conformation with the 

17 industry standard; and 

18 (iii) an acceptably low loan failure 

19 rate of similarly situated business enter20 prises for loans guaranteed under the 

21 Small Business Act; and 

22 (C) in the case of a business enterprise 

23 that is a startup, or that is otherwise not in op24 eration at the time of the application— 


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1 (i) a business plan for the operation 

2 of that enterprise, prepared with the as3 sistance of any agency that the Secretary 

4 determines appropriate, that leads to prof5 itable operation within a reasonable time 

6 frame, and that includes such other infor7 mation as the Secretary, in consultation 

8 with the Administrator, determines appro9 priate; or 

10 (ii) a business plan approved by a per11 son designated by the Secretary, in con12 sultation with the Administrator, from 

13 among— 

14 (I) any department or agency of 

15 the Federal government; 

16 (II) an institution or higher 

17 learning; or 

18 (III) a non profit enterprise. 

19 SEC. 4. USE OF BENEFITS IN QUALIFYING FOR SMALL BUSI20 NESS LOANS AND FARM LOAN. 

21 (a) SMALL BUSINESS LOANS.—In determining the 

22 creditworthiness of a veteran for a loan guaranteed by the 

23 Administrator under the Small Business Act, all benefits 

24 made available to the veteran under the program estab25 lished under section 3 shall be taken into account. 


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1 (b) FARM LOANS.—In determining the creditworthi2 ness of a veteran for a loan made or guaranteed pursuant 

3 to the Consolidated Farm and Rural Development Act, the 

4 Secretary of Agriculture shall take into account all bene5 fits made available to the veteran under the program es6 tablished under section 3. 

7 SEC. 5. SURVIVORS’ BENEFITS. 

8 (a) IN GENERAL.—In the event that a veteran who 

9 has received more than $2,500 in benefits under this Act 

10 dies before receiving the balance of any benefits payable 

11 to the veteran under this Act, the Secretary may pay any 

12 benefits approved to be paid to the veteran to a survivor 

13 of the veteran who is designated by the veteran for such 

14 purpose. 

15 (b) LIMITATION ON SURVIVOR ELIGIBILITY.—To be 

16 eligible to be a survivor of a veteran for purposes of this 

17 section, an individual must be at least 18 years of age 

18 at the time of death of the veteran and must have inher19 ited the business from the veteran at the time of the vet20 eran’s death. 

21 (c) PERIOD OF SURVIVOR ELIGIBILITY.—The period 

22 during which a survivor of a veteran is eligible to receive 

23 benefits under this section is the greater of— 

24 (1) the five-year period beginning on the date 

25 of the veteran’s death; or 


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1 (2) the period beginning on the date of the vet2 eran’s death and ending upon the termination of the 

3 longest term of any business loan obtained by the 

4 veteran before the veteran’s death for the business 

5 enterprise for which the veteran received benefits 

6 under this Act. 

7 (d) LIMITATION ON USE OF FUNDS TO SECURE

8 LOANS.—A survivor of a veteran who receives benefits 

9 under this section may not use the benefits to secure any 

10 new loan. 

11 (e) DUPLICATION OF BENEFITS.—If the survivor of 

12 a veteran who receives benefits under this section is also 

13 eligible to receive benefits under section 3, the survivor 

14 may not use benefits payable under section 3 for a busi15 ness enterprise other than the business enterprise for 

16 which the veteran receives benefits under this section. The 

17 survivor may use benefit payable to the survivor under sec18 tion 3 to affect the transfer into the survivor’s name of 

19 100 percent of the assets, liabilities, and operations of the 

20 business enterprise for which the veteran receives benefits 

21 under this section. 

22 SEC. 6. DEFINITIONS. 

23 In this Act: 

24 (1) The term ‘‘Secretary’’ means the Secretary 

25 of Veterans Affairs. 


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1 (2) The term ‘‘Administrator’’ means the Ad2 ministrator of the Small Business Administration. 

3 (3) The term ‘‘veteran’’ has the meaning given 

4 that term in section 101 of title 38, United States 

5 Code. 

6 (4) The term ‘‘institution of higher learning’’ 

7 has the meaning given such term in 3452(f) of title 

8 38, United States Code. 

9 (5) The term ‘‘Program benefits’’ means pay10 ments described in section 3. 

11 (6) The term ‘‘franchise business enterprise’’ 

12 means any continuing commercial relationship or ar13 rangement, whatever it may be called, in which the 

14 terms of the offer or contract specify, or the fran15 chise seller promises or represents, orally or in writ16 ing, that— 

17 (A) the franchisee will obtain the right to 

18 operate a business that is identified or associ19 ated with the franchisor’s trademark, or to 

20 offer, sell, or distribute goods, services, or com21 modities that are identified or associated with 

22 the franchisor’s trademark; 

23 (B) the franchisor will exert or has author24 ity to exert a significant degree of control over 

25 the franchisee’s method of operation, or provide 


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1 significant assistance in the franchisee’s method 

2 of operation; and 

3 (C) as a condition of obtaining or com4 mencing operation of the franchise business en5 terprise, the franchisee makes a required pay6 ment or commits to make a required payment 

7 to the franchisor or its affiliate. 

8 (7) The term ‘‘franchisee’’ means any person 

9 who is granted a franchise business enterprise. 

10 (8) The term ‘‘franchisor’’ means any person 

11 who grants a franchise business enterprise and par12 ticipates in the franchise relationship. Unless other13 wise stated, such term includes subfranchisors. 

14 (9) The term ‘‘subfranchisor’’ means a person 

15 who functions as a franchisor by engaging in both 

16 pre-sale activities and post-sale performance. 

17 SEC. 7. EFFECTIVE DATE. 

18 This Act shall take effect on the date that is one year 

19 after the date of the enactment of this Act. 

Æ 


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