Lending to R.I. veterans on rise

SERVICE MAN: Vietnam combat veteran and Veterans Assembled Electronics owner John Shepard, standing, works with mechanical engineer Michael Ratigan. / PBN PHOTO/BRIAN MCDONALD
SERVICE MAN: Vietnam combat veteran and Veterans Assembled Electronics owner John Shepard, standing, works with mechanical engineer Michael Ratigan. / PBN PHOTO/BRIAN MCDONALD

Vietnam combat veteran John Shepard had already co-founded two breakthrough-technology companies – involving network firewalls and fingerprint readers – when he went looking for a line of credit for his most recent company, Veterans Assembled Electronics.
The military market is a relatively small one for banks in the Rhode Island, Massachusetts and Connecticut region, compared to broader segments, where banks focus on luring consumers with a palette of new services and also on generating more commercial business.
But the military-banking clientele is a growing one, according to data from the Small Business Administration in Rhode Island, which offers a variety of financial assistance to veterans, including federally guaranteed Patriot Express loans.
Combined figures for 2009 and 2010 add up to $10.6 million in all SBA loans to veterans in Rhode Island, said Normand Deragon, economic-development specialist and veteran-business-development officer for the SBA in the Ocean State.
Combined figures for 2011 and 2012 add up to $20 million in SBA loans to Rhode Island veterans, said Deragon.
“I was a little surprised. And I think it’s about time,” Deragon said of the dramatic increase in SBA loans to veterans for existing and startup businesses.
A Department of Defense contractor, Shepard already had an office in the Cape Canaveral area in Florida as part of the company’s training and placement program for veterans. He had been working from his home in North Kingstown since the 2009 start-up of his small electronics-systems design and manufacturing company. A year ago, he was ready to establish the business in Newport.
“The business started growing a bit, our revenue started growing a bit and we were getting closer to getting a new contract. We had four employees and were getting ready to go to six,” said Shepard. “I went to one bank where I had an account and they just weren’t interested in helping with a line of credit,” he said. “I went to a financial adviser who suggested Webster Bank because they were forward-thinking and worked well with veterans and startups.”
Shepard already had an account at Webster and called the bank. “Don Troppoli came to my house to talk about my business,” Shepard said of Webster Bank’s senior vice president and regional manager for small-business banking. “The bank approved the line of credit for us and I think it was done in about two or three weeks.”
Veterans Assembled Electronics set up shop in Newport in March and has four employees, with four others in the Florida office.
“We hope there will be add-ons to this contract in the next couple of years and we can hire more people,” said Shepard.
The SBA on May 21 launched its Veterans Lending Initiative, which encourages banks nationwide to increase loans to veterans and veteran-owned small businesses by a total of 10 percent over the next five years.
“In chatting with these veterans who are coming back from Afghanistan and Iraq, they’re saying they have skills and want to put those skills to work and they don’t want to work for anyone else,” said Deragon, whose 31 years of military service include the Air Force and the Coast Guard Reserve.
“I think it’s a maturing process because of what they went through,” he said.
“We provide them counseling through SCORE and the SBA so they can develop business plans and have documents to take to the bank,” said Deragon. “It’s good to see the lending community supporting our veterans.”
Citizens Bank supports the SBA Veterans Lending Initiative and has committed to increasing loans to veterans who are small-business owners over the next five years, said bank spokeswoman Megan Lemoi.
“We see this as a great opportunity to build on some of our other programs for veterans, including special rates and deferment options on our TruFit Student Loans and VA mortgage loans,” said Lemoi.
While many banks work with veterans and are lenders for the SBA Patriot Express loans, Deragon said, “Webster Bank really bends over backwards for veterans.”
The military market is a specific focus for Webster Bank across its four-state region, with locations in Rhode Island, Connecticut, Massachusetts and New York.
The bank launched a military-banking program in 2009, with advantages including a $500 mortgage rebate and a return of ATM fees from any bank, including foreign banks. Webster’s military accounts increased 38 percent in 2012 over 2011, said bank spokesperson Brenda Greene.
The bank currently has about 3,000 military-banking customers over the four-state region.
“We’ve gone to great lengths to educate our branch managers,” said Robert Polito, Webster Bank senior vice president and director of government-guaranteed lending. Polito is based in New Britain, Conn., and often meets with veterans at a variety of workshops across the region.
Webster has also pledged to increase its lending to veterans by 20 percent per year over the next five years, said Polito.
The emphasis on lending to veterans comes from understanding their strength and commitment, said Polito, who served in the Army National Guard in Connecticut.
“These veterans seeking to expand or start a business understand what it means to complete a task. They understand the mission,” said Polito. “They have perseverance and never give up and I think that bleeds over into their business work.
Polito has put Webster Bank on the leading edge of the Patriot Express program since it began in 2007.
“I wanted to be the first bank in the country to approve a Patriot Express loan. We had a veteran who had been approved and I was on my computer ready to go on midnight the first day it went into effect in June 2007,” he said.
He hadn’t known the bank’s technology people had shut down the system for maintenance. He got the loan sent at 7:30 a.m. when his technology staff was back at work.
For veterans seeking any type of SBA loan, the request is through a bank, which applies for an SBA guarantee of the loan. The portion of the loan guaranteed by the SBA varies with the program.
As the SBA pushes forward with its new Veterans Lending Initiative, the goal is to work with banks across the nation to increase lending to an additional 2,000 veterans over five years.
In SBA’s New England region, the goal of the initiative is to collectively increase lending by banks to a total of 141 new veterans over the next five years, said Deragon. •

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