War squeezes businesses owned by reservists

WASHINGTON (Reuters) - Having served in Iraq, Dave Krasner is now back home in Boston, struggling to keep alive the small computer consulting company he left behind.

"I love my country. But what do I do now?" said Krasner, a National Guardsman whose firm was buried in debt while he was away at war for much of 2004 and 2005. "My credit was wrecked. The SBA (Small Business Administration) turned me down for loans. So have banks. I can't face my children. They see me as a hero."

The 35-year-old father of four is among a growing legion of reservists who have returned from deployments of up to 15 months to see their small businesses in trouble, if not dead.

"When a reservist has to shut his business down because his credit plunged while he was serving in Iraq, Washington isn't keeping its promise to veterans," said Sen. John Kerry, a Massachusetts Democrat.

As chairman of the Small Business and Entrepreneurship Committee, Kerry is pushing legislation to give an increased hand to these part-time warriors and veterans who own small businesses or want to begin one.

It would: upgrade a 1999 economic disaster loan program for reservists; authorize a study on the needs of disabled vets interested in opening a business; and provide reservist small business owners with a grant of up to $25,000 and loans of up to $100,000 without collateral. It would also increase funding for the SBA's Office of Veterans Business Development.

An estimated 6 percent of the 1.1 million members of the National Guard and Army, Navy, Air Force, Marine Corps and Coast Guard reserves are self-employed.

"Just about everyone who is in business for himself or herself are hard hit when called up," said Peter Duffy of the National Association of Guardsmen, a nonprofit advocacy group.

Reservists include electricians, carpenters, accountants, corner grocery store owners and even doctors and lawyers with small practices.

Under U.S. law, reservists who work for someone else -- a private firm or local, state, or federal government -- have safeguards to get their jobs back. Yet those who work for themselves have no such guarantees.

With demands for more relief, the SBA recently began a pilot loan targeted to veterans, reservists and their spouses.

Kerry hailed it as a "good first step," but urged that its double-digit interest rates be lowered and said government must do more to publicize this and other such efforts.

Relatively few have sought a Military Reservist Economic Injury Disaster Loan, created by Congress in 1999 to help reservists who suffer major financial loses while serving their country.

From August 2001 through last March, the SBA's office of disaster assistance approved just 271 such loans, about 60 percent of those who applied, Elmore said.

Critics complain that the government has failed to adequately promote the program and that the hurdles are tough to clear. They include a limited period to apply for a loan.

William Elmore, associate administrator of the SBA's Office of Veterans Business Development, said the SBA has been handcuffed by the way Congress wrote the disaster loan program.

"We're obviously looking at what steps we can take to try to enhance the applicability and usability of it," said Elmore, who has conferred with Kerry about the senator's bill.

HONOR VS. COST

Tom Gotsis, 50, a dentist and Army reservist outside of St. Louis, said he was on his third deployment in five years -- each about 110 days -- before he learned the disaster loans existed. He said he landed a 30-year, $185,000 loan with monthly payments of $888 at an interest rate of 4 percent.

"It's like another house payment but it saved my practice," said Gotsis, who figures each deployment cost his practice between $250,000 to $300,000. "It's an honor to serve your country, but it shouldn't cost us our profession."

"There's a lot of 'support the troop' stuff out there, but what does that really mean?" asked Mark Aldrich, a captain in the Massachusetts Army National Guard.

Aldrich, 36, married with two children, came home in October 2005 after 16 months in Iraq. The small marketing firm he formed shortly before being deployed was in financial difficulty. So he knocked on doors for help.

"All trails seemed to lead to the SBA, but they really didn't have anything," said Aldrich, explaining myriad rules and regulations eliminated him and others.

Aldrich set aside the marketing firm and developed a new company that provides casinos with a directory for a variety of supplies. He also helped form a nonprofit outfit, Veterans Business Group, to help others.

Aldrich conferred with Kerry's staff in the drafting of the senator's bill and is hopeful it will be passed Congress and be signed into law by President George W. Bush.

"It better become law. More and more reservists are being called up," Aldrich said.

Back in Boston, Krasner is trying to borrow against his house and convince those in power to help struggling reservists.

In a letter to Kerry's panel, Krasner wrote: "We are begging for help and cannot understand why, even if this is an unpopular war, we are not given a fair opportunity to keep our home and run a successful business."