Matthew Carroll has always been infatuated with cars. He also has a mechanical aptitude and dreamed of owning his own business one day.
So when the opportunity came along in 2009 to purchase the ground transportation company for which he worked, Milwaukee-based Limousines Inc., he jumped at the chance.
But there was one snag. Carroll, now 34, was not able to secure traditional financing from a bank.
Before starting at Limousines Inc., Carroll had served as a U.S. Navy aircraft maintenance engineer from 2000 to 2005 and then attended the University of Wisconsin-Milwaukee full-time. While he had experience maintaining and repairing F-14 Tomcats and Delta series fighters, and had managed 38 plane captains in flight operations, he was hitting a wall when it came to his civilian career.
“Even with what I thought was a good business plan, when I went to go present it to a bank, it was a very frustrating experience and a very humbling experience,” Carroll said. “No bank even attempted to work with me on that. It was just straight out ‘No’ and that was the end of it.”
Carroll’s situation is not uncommon among military veterans, according to Saul Newton, executive director of the Wisconsin Veterans Chamber of Commerce.
The Milwaukee-based Wisconsin Veterans Chamber was formed in August 2015 to advocate for and increase the number of veteran-owned and veteran-friendly businesses across the state.
Veterans face some inherent disadvantages when it comes to starting a business, particularly in obtaining capital, Newton said. Often, a veteran hasn’t had the opportunity to establish a credit history.
“They don’t have the personal financial network or the financial history because of their military service,” he said.
Military service members are often moved around the country or deployed for up to eight months at a time, during which they are fed and housed by the government and are not spending time establishing a credit score or building a banking relationship, Newton said.
Veterans are frequently doing things like paying rent and buying groceries for the first time after they leave the military, and they may not have financial management down yet, said Mike Moran, a corporate and institutional banker at PNC Bank in Milwaukee. The bank offers free personal finance classes that cover everything from how to balance a checkbook to more sophisticated financial concepts, he said.
Like many banks, PNC offers federal SBA 7(a) loans to small businesses. The SBA waives the fees on 7(a) loans of up to $150,000 for every small business owner, and gives a 50 percent fee reduction for veterans on loans after the first $150,000, up to $5 million.
Moran, a veteran himself, advised veterans who would like to become entrepreneurs to work on improving their credit score and discuss budgeting with a personal banker before starting a new business venture.
“Get to know your bankers well in advance of when you will need the money,” Moran said. “There’s quite a bit of independence among veterans and so there’s not necessarily a motivation to seek out help with things.”
The Wisconsin Veterans Chamber has been working with banks, including PNC and Wauwatosa-based WaterStone Bank, to develop resources that are available specifically to veterans, since they are a disadvantaged group, Newton said.
Carroll was able to purchase Limousines Inc. after all, using loans from family and friends, back in 2009. Since then, he has purchased three other complementary companies to form Accutrans Inc., which has 30 employees and a fleet of executive sedans, limousines, SUVs, vans and buses. When he purchased Limousines Inc., the business had about 13 employees.
“The military gave me the skills to show I can actually do whatever I want,” he said.
In 2013, his small business attorney referred Carroll to the Wisconsin Women’s Business Initiative Corp., which offers entrepreneurship training and financing to underserved groups such as women, minorities and lower wealth individuals. WWBIC coached Carroll on refining his business plan.
“Whereas a bank would just say, ‘No, this doesn’t work,’ WWBIC would tell you why it doesn’t work,” he said.
As a result, Carroll has now obtained a $49,500 small business loan from WWBIC to replace two aging sedans from his fleet. And he’s also opened a $50,000 line of credit with the nonprofit to assist with cash flow.
“We’re doing real well with the business, but floating the receivables was becoming a tad burdensome,” he said.
That makes sense, since Accutrans has been growing quickly. Year-to-date for 2016, revenue is up 92 percent from the same period last year, Carroll said.
Between five and seven percent of WWBIC’s clients are veterans, said Wendy Baumann, president of WWBIC.
“If the business is startup, it’s going to be harder to finance,” she said. “By virtue of them being a veteran, that is not anything we would see as a negative or as a disadvantage.”
The organization offers personal financial counseling to prepare an entrepreneur for the business finances.
“We have financial counselors on staff to make sure there’s an understanding if there’s a low credit score, to improve that credit score. And if there’s some need for budgeting, to help with that,” Baumann said.
