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Pacific edition, Sunday, June 17, 2007

WASHINGTON — The Small Business Administration hopes a pilot program offering up to $500,000 in business capital to veterans will spur more interest among military members in starting their own companies.

The program, dubbed the Patriot Express initiative, is open to veterans, reservists and spouses of active-duty military who need government-backed loans to launch or expand their small business. It’s the first loan from the agency directed solely at military and retired military since the Vietnam War.

The loans are geared toward entrepreneurs familiar with running a small business, and likely aren’t the first step for a young veteran hoping to open his own store or company, according to spokesman Joel Szabat.

“But we have training and outreach programs for military already to give them counseling and information they need to get started,” he said.

“These are the kind of great credit risks that banks want to take: people who have served their country and want to start their own business. And hopefully this pilot will get them working closer with us to see that.”

According to U.S. census statistics about 15 percent of veterans are self-employed. For troops looking to open a repair shop after years working in an Army motor pool, or those who want an IT firm after computer network duties with the Air Force, the counseling can help them understand the basics of reaching that dream, Szabat said.

SBA Administrator Steven Preston said he believes the new Patriot Express loans will have the most impact among established veteran and reservist firms.

Under the pilot program, individuals receiving the loans will pay slightly lower rates — between 2.25 percent and 4.75 percent above the prime rate — than on other SBA products, and banks issuing the loans will see most of the balance backed by the government.

The $500,000 maximum also is above what the administration typically offers, but Preston said the higher level is necessary to meet the needs of those companies. Only 10,000 of the loans will be issued under the pilot rules, but officials expect to expand that number if the program is successful.

For more information on the new loans or the existing small business programs, visit www.sba.gov.

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