M28R, Part VI, Section A, Chapter 9 Revised March 31, 2014
Chapter 9
SELF-EMPLOYMENT
9.01 Introduction
9.02 References and Resources
9.03 Self-Employment Orientation
9.04 Completion of a Comprehensive Evaluation
a. Responsibilities
b. Preliminary Self-Employment Evaluation Questions
c. Preliminary Self-Employment Evaluation Findings
d. Business Concepts
9.05 Categories Assignment for Self-Employment Assistance
a. Category I
b. Category II
c. Provision of Service
9.06 Fast Track Planning for Self-Employment
a. Limitations
b. Procedures
c. Viability Analysis of the Business Plan
d. Outcomes
9.07
Develop a Proposed Business Plan
a. Business Plan Development
b. Review and Analysis of Business Plan
c. Summation of Business Plan Analysis
9.08 Develop and Implement a Self-Employment Rehabilitation Plan
a. Individualized Written Rehabilitation Plan (IWRP)/Individualized Employment
b. Self-Employment Plan Concurrence
c. Case Management
9.09 Limited and Specifically Defined Self-Employment Assistance
a. Chapter 31
b. State Vocational Rehabilitation Program
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9.10 Self-Employment Services for an Existing Business
a. Retroactive Induction
b. Procedures
9.11 Required Documents for the Delivery of Self-Employment Services
a. The Self-Employment Fact Sheet
b. VAF 28-0800, VR&E Program Orientation
c. Preliminary Self-Employment Evaluation
d. Information Needed to Conduct a Viability Analysis
e. Summation of Business Plan Viability Analysis
f. VAF 28-0794, Self-Employment Plan Approval Request
g. VAF 28-8872, Rehabilitation Plan
h. Case Support - CWINRS’ case notes, VAF 28-1905d and VAF 119
Appendix O. VA Forms
Appendix BF. Self-Employment Job Aid
Appendix BH. Financial Resources for Self-Employment
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Chapter 9
SELF-EMPLOYMENT
9.01 Introduction
The self-employment track is designed for Veterans who have the necessary job
skills to start a business. Self-employment may also be the right track for
Veterans who have limited access to traditional employment or require a more
accommodating work environment due to the effects of a disability. This chapter
provides guidance on the self-employment process, the assignment of categories
for self-employment assistance and self-employment in conjunction with a State
Vocational Rehabilitation agency. Statutory and regulatory references are also
provided throughout this chapter.
9.02 References and Resources
Laws: Small Business Act of 1953, as Amended
Fair and Accurate Credit Transactions Act
38 United States Code (U.S.C.) 3104
38 U.S.C. 3107
38 U.S.C. 3117
Regulations: 38 Code of Federal Regulations (CFR) 21.50
38 CFR 21.84
38 CFR 21.88
38 CFR 21.98
38 CFR 21.184
38 CFR 21.214
38 CFR 21.252
38 CFR 21.257
38 CFR 21.258
38 CFR 21.282
VA Forms (VAF): VAF 119, Report of Contact
VAF 28-0794, Self-Employment Plan Approval Request
VAF 28-0800, VR&E Program Orientation
VAF 28-1902b, Counseling Record-Narrative Report
VAF 28-1902n, Counseling Record-Narrative Report
(Supplemental Information)
VAF 28-1905d, Special Report of Training
VAF 28-8872, Rehabilitation Plan
Websites: www.sba.gov
www.vetbiz.gov
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www.va.gov/osdbu/veteran/vep.asp
www.AnnualCreditReport.com
www.vaaccelerator.com
9.03 Self-Employment Orientation
The VRC must orient the Veteran to the self-employment process before the self-
employment planning process begins. The Self-Employment Fact Sheet should
be given to the Veteran at this time along with the link to the ”Operation Boots
to Business” video. This video can be accessed online at the Veterans
Entrepreneurship Portal website by using the following link and clicking on
Operation Boots to Business found under Starting a Business or Training and
Employment: www.va.gov/osdbu/veteran/vep.asp. See Appendix O, VA Forms
for access to the Self-Employment Fact Sheet.
The Veteran must sign VAF 28-0800, VR&E Program Orientation (see Appendix
O, VA Forms), to verify that the link to the video was provided. The VRC will
give the Veteran a copy of the form and file the original on the right side of the
Veteran’s Counseling/Education/Rehabilitation (CER) folder.
9.04 Completion of a Comprehensive Evaluation
A preliminary self-employment evaluation assesses the Veteran’s needs,
potential, suitability and readiness to start a business. The evaluation will also
identify and address all issues or barriers to the successful pursuit of a self-
employment plan. This evaluation is completed during the evaluation and
planning phase of service delivery as outlined in 38 CFR 21.184.
a. Responsibilities
The VRC must work closely with the Veteran to foster an open line of
communication to ensure that the evaluation process is successful. It is
imperative that the VRC have a clear understanding of the Veteran’s
motivation, functional ability and interest, as self-employment is one of the
most demanding tracks to employment. It is much more challenging than
simply obtaining and maintaining employment in a traditional setting. It is
the responsibility of the VRC to help the Veteran make an informed decision
regarding this track to employment.
Examples of the demands and challenges associated with pursuing self-
employment include the following:
• Developing a viable business plan
• Obtaining funding
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• Securing a business location
• Hiring staff
• Obtaining an initial stock
• Advertising and marketing
• Understanding business and tax law
• Learning purchasing and accounting skills
• Developing a strong support system
• Understanding the impact on personal finances since it takes time before
a new business turns a profit or provides financial support
Veterans are responsible for actively participating in the self-employment
process from the onset of service. The Veteran must agree to use resources
to assist in the development and implementation of a business plan. It is
imperative that the Veteran has a clear understanding of the self-employment
process before the pursuit of this track to employment. The intensive nature
of the evaluation and planning process is lengthy and can take several
months to complete. An informed Veteran will be better prepared to
anticipate and work within the self-employment framework and timeline.
1. Credit History
As part of the preliminary self-employment evaluation, it is the
responsibility of the Veteran to check his/her credit report since the credit
report will be used by potential lenders and suppliers to determine terms of
credit. The Veteran may find errors that need to be corrected or may
decide that starting a business is not possible until he/she can bring up the
credit score. The Veteran must be notified that under the Fair and
Accurate Credit Transactions Act, a free credit report can be obtained once
every 12 months from the following 3 major credit reporting agencies:
Equifax, Experian and TransUnion. (More information can be found at
www.AnnualCreditReport.com.) Since free credit reports provided by
credit reporting agencies do not include credit scores, these agencies
charge a fee for providing this information, which may be reimbursed to
the Veteran following direct reimbursement guidance located in
M28R.V.A.3.
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2. Funding Sources
As part of the preliminary self-employment evaluation, it is the
responsibility of the VRC to inform the Veteran that the provision of
services is based on category assignment and that VR&E must not be
considered the sole source in establishing a business. Establishing a
business requires the Veteran to rely mainly on his/her own resources if
supplies or related assistance are beyond the scope of what may be
provided under a Category I or Category II assignment. This means that
the Veteran may need to secure alternate funding sources if his/her
business requires services greater than what VA can authorize.
b. Preliminary Self-Employment Evaluation Questions
The following questions provide structure for VRCs when gathering
information to determine the Veteran’s suitability and readiness to start a
business:
• What business would the Veteran like to start?
• Will the Veteran’s disability pose any barriers to operating the business?
If yes, what reasonable accommodations can be developed to address
those barriers?
• Will the Veteran’s credit history/score impact his/her ability to obtain any
necessary alternate funding greater than what the VA can provide? The
Veteran must provide a copy of his/her credit report, with score included,
for review and verification that this information will not pose a barrier for
future alternate funding requests.
• What qualifications does the Veteran possess to ensure he/she has the
ability to start and operate a business?
• What skills and/or knowledge will the Veteran need to acquire to operate
this business?
• Why does the Veteran want to start this type of business?
• Where will the business be located?
• What hours and days will the business operate?
• Who will use the Veteran’s service and/or buy the product(s)?
• Where are the Veteran’s business/customers located?
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• If you were a potential customer, why would you use this business? What
would keep you coming back to this business?
• Is there another business like the one the Veteran proposes operating in
the same area? If so, is it successful? Why or why not?
• How will the Veteran advertise his/her business?
• How many customers does the Veteran estimate he/she will have during
the first and second year?
• How much money will be required to start the business? What are the
likely sources for securing the start-up funds?
• How much money does the Veteran estimate he/she will earn during the
first and second year?
• Will the Veteran hire employees? If so, how much will the Veteran pay
the employees?
• Who will do the ordering, customer contact and bookkeeping?
• What equipment will be needed? How will the Veteran acquire this
equipment?
The VRC may consider asking the Veteran to address these questions before
the evaluation and planning meeting. This will not only be a useful tool to
assess the Veteran’s motivation and interest, but the responses can guide the
meeting and ensure that a complete evaluation is obtained. Since some of
questions may not be fully answered until business plan development, “Not
Applicable” or “NA” may be an appropriate answer. If “NA” is indicated, then
the VRC should document why the information is not available during the
preliminary evaluation.
c. Preliminary Self-Employment Evaluation Findings
The preliminary self-employment evaluation findings will assist the VRC in
determining if either of the following applies:
1. Self-employment is warranted. If so, then the VRC will assist the Veteran
in the development of a business plan.
2. Self-employment is not warranted at this time. If so, then the VRC will
consider alternative rehabilitation services or further services to assist the
Veteran in becoming ready for self-employment.
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The preliminary self-employment evaluation findings must be documented on
VAF 28-1902b, Counseling Record-Narrative Report, or in a Corporate WINRS
(CWINRS) note.
NOTE: The VRC may use a contract counselor to complete this process if
contractual agreements are in place for the use of for-profit entities.
d. Business Concepts
During the preliminary self-employment evaluation, the VRC must gather
information to determine what type of business the Veteran would like to
start and determine if the stated goal is consistent with the Veteran’s abilities,
interests and aptitudes. The following information on non-profit businesses
and franchises should be given to Veterans who express an interest in one of
these types of business concepts:
1. Non-Profit Businesses
Non-profit business concepts must not be approved by VR&E since non-
profit businesses are not owned by an individual, but rather by the public.
38 CFR 21.257 (f)(5) states that coordination with the Small Business
Administration (SBA) for special consideration of section 8 of the Small
Business Act, as amended, must be conducted as part of the viability
analysis of the proposed self-employment business plan. Section 8
supports assistance to those businesses owned and controlled at least 51
percent by socially or economically disadvantaged individuals. Further
research also indicates that Public Law 108-183, Veterans Benefits Act of
2003, states that Service-disabled Veteran Owned Small Businesses
(SDVOSBs) must be at least 51 percent unconditionally and directly owned
by 1 or more service disabled Veterans. The SBA does not endorse non-
profit businesses as SDVOSBs nor do they provide loans to businesses
that do not operate for profit.
2. Franchises
Franchises may be approved if they are endorsed as part of the viability
analysis of a proposed self-employment business plan. A franchise is a
right granted to an individual or group to market a company's goods or
services within a certain territory or location. Some examples of today's
popular franchises are McDonald's, Subway, Domino's Pizza and the UPS
Store. An individual who purchases and runs a franchise is called a
"franchisee." The franchisee purchases a franchise from the "franchisor."
The franchisee must follow certain rules and guidelines already
established by the franchisor, and in most cases the franchisee must pay
an ongoing franchise royalty fee, as well as an up-front, one-time
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franchise fee to the franchisor.
It is important to note that franchise fees may not be paid by VR&E since
it is beyond the scope of what may be provided under a Category I or
Category II assignment. When the Veteran’s business requires supplies or
fees greater in amount than VA may authorize, the Veteran is responsible
for securing alternate funding sources. The source of payment or
resources available for such items should be identified in the business
plan. Veterans interested in purchasing franchises may be eligible for
loans from the SBA except when a franchisor retains power to control
operations to such an extent that it appears to be an employment
contract; the franchisee must have the right to profit from efforts
equivalent to ownership.
9.05 Categories Assignment for Self-Employment Assistance
Once the Veteran has checked his/her credit report and the preliminary self-
employment evaluation findings indicate that self-employment is warranted, the
appropriate category should be assigned. The VRC must assign Veterans to one
of two categories of services when the self-employment track is elected. The
category assignment is based on information obtained from the initial entitlement
evaluation, as well as the preliminary evaluation for self-employment services.
The provision of services is dependent on the category assignment and governed
by 38 CFR 21.214, 21.252 and 21.257.
a. Category I
Veterans designated as Category I must meet the following four conditions:
1. Serious employment handicap (SEH).
2. Most-severe service-connected disabilities.
3. Employability limitations so severe that self-employment is the only option
to achieve the rehabilitation goal.
4. All other reasonable employment goals are unsuitable due to the severity
of the Veteran’s service connected disability(ies).
Given the stringent requirements for a Category I assignment, it is anticipated
that only a small number of Veterans will qualify for this level of self-
employment services. Approval from VR&E Service Central Office (CO) must
be obtained for all Category I assignments prior to plan development. To
obtain approval for a Category I assignment, VR&E staff must adhere to the
following steps:
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Step 1: The VR&E Officer (on behalf of the VRC) is required to submit
specific documentation to the attention of the VR&E Service Director for
approval of a Category I assignment prior to plan development for a Fast
Track IWRP for self-employment.
The documentation must include at minimum the following:
• Memo justifying the approval of Category I assignment
• Rehabilitation Needs Inventory (VAF 28-1902w)
• Vocational Assessment
• Counseling Record (VAF 28-1902b)
The memo must include the preliminary self-employment evaluation findings
and sufficiently address the conditions a Veteran must meet in order to be
designated as Category I.
Step 2: Prior to execution of the business plan, all Category I cases must be
submitted to CO for approval in the same manner that self-employment cases
are submitted if the cost is over $25,000. For all Category I Self-Employment
cases, this level of CO approval is required even if the case cost is under
$25,000.
The VR&E Officer (or designee) must mail the CER record to the attention of
the VR&E Service Director.
VR&E Service will review the case for the appropriateness of the entitlement
and feasibility determination as well as the Category I assignment. For
requests for Category I approval, a response will be returned in writing and
electronically within 10 working days to the RO Director’s mailbox to ensure
timely provision of services.
b. Category II
Veterans designated as Category II must have one of the following:
1. Employment handicap, or
2. SEH, but the service-connected disability(ies) is not considered most
severe.
Category II assignments do not need concurrence at the CO level, but self-
employment plan approvals still need to go to the VR&E Officer (VREO) and
other signature levels must be obtained depending on cost of the plan.
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(Refer to section 9.08.b of this chapter for more information on self-
employment plan concurrence.)
c. Provision of Service
The provision of service is based on category assignment. When identifying
costs during plan development, the VRC must decide whether the costs are
essential or optional. A realistic start-up budget should only include those
things that are necessary to start a business.
1. Services Available to Veterans Classified as Category I
VR&E may provide the following level of special services and assistance to
Veterans assigned to Category I:
(a) Comprehensive training in the vocational goal, and in the operation of
a small business.
(b) Minimum stocks of materials such as an inventory of salable
merchandise or goods.
(c) Expendable items required for day-to-day operations, and items which
are consumed on the premises.
(d) Essential equipment, including machinery, occupational fixtures,
accessories and appliances.
(e) Incidental services such as business license fees, Workers’
Compensation Insurance and disability insurance.
(f) If the Veteran incurred costs for training or other rehabilitation
services related to training (i.e., required program costs), and the VRC
determines that the training and/or other rehabilitation services were
reasonably needed to achieve the goals of the rehabilitation plan, then
those costs can be reimbursed per 38 CFR 21.282(c).
2. Services Available to Veterans Classified as Category II
VR&E may provide the following level of special services and assistance to
Veterans assigned to Category II:
(a) Comprehensive training in the vocational goal.
(b) Incidental training in the management of a small business.
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(c) License or other fees required for employment (e.g., required business
insurance such as Workers’ Compensation Insurance and disability
insurance).
(d) Personal tools and supplies that are required of all individuals to begin
employment in the approved occupational field.
(e) If the Veteran incurred costs for training or other rehabilitation
services related to training (i.e., required program costs), and the VRC
determines that the training and/or other rehabilitation services were
reasonably needed to achieve the goals of the rehabilitation plan, then
those costs can be reimbursed per 38 CFR
21.282(c).
3. Services and Assistance Veterans Affairs (VA) Must Not Authorize
Certain discrete services may not be provided to Veterans participating in
the self-employment track. Veterans should be informed that VA must not
authorize any of the following even if considered essential to the startup
of the business:
(a) Full or partial payment to purchase land or buildings.
(b) Lease or rental payments. (See M28R.V.A.4 for guidance on temporary
rental of computer equipment.)
(c) Purchase or rentals of cars, trucks, or other vehicles.
(d) Stocking either a farm for animal husbandry operations or a fishery.
(e) Franchise fees.
9.06 Fast Track Planning for Self-Employment
Fast Track planning may be used for Veterans when self-employment is the
primary focus of further rehabilitation planning to determine if self-employment
is appropriate for a Veteran. Fast Track planning allows for the identification of a
specific vocational goal to be deferred by allowing the use of Dictionary of
Occupational Titles (DOT) Code 999 in the Individual Written Rehabilitation Plan
(IWRP). It is called “Fast Track” planning because the movement from
Evaluation and Planning (EP) Status to Rehabilitated To the point of
Employability (RTE) status is accelerated by allowing vocational exploration and
planning activities, historically completed during EP status, to be completed in
RTE status. As a result, the Veteran can begin services earlier in the
rehabilitation process. When using Fast Track planning, the development of a
viable business plan will be accomplished in RTE status under a Fast Track IWRP.
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a. Limitations
It is important to note that the maximum duration for a Fast Track IWRP is
12 months, or 3 consecutive terms, whichever is longer. The VREO can
approve an extension up to 6 months, or 2 consecutive terms of training,
whichever is longer, if it is determined that this extended period is needed
and will result in the identification of a vocational goal.
b. Procedures
The following procedures outline the use of Fast Track planning to determine
if self-employment is appropriate for a Veteran that has been found entitled
under Chapter 31:
1. Initial Evaluation
The case status should be moved to EP Status to determine entitlement
and whether the achievement of a vocational goal is currently reasonably
feasible on the day the Veteran reports for an initial evaluation
appointment. If the Veteran is found entitled, achievement of a
vocational goal is currently reasonably feasible and self-employment is the
primary focus of further rehabilitation planning, the VRC should orient the
Veteran to the self-employment process (refer to section 9.03 of this
chapter) and complete the preliminary self-employment evaluation to
determine if self-employment is warranted (refer to section 9.04 of this
chapter).
A second appointment may be needed to conduct the preliminary
evaluation so that the Veteran has a chance to check his/her credit report
and ensure that self-employment is still the primary focus of rehabilitation
planning. If the preliminary evaluation is still needed, the VRC will identify
what business the Veteran is interested in starting and determine if the
stated goal is consistent with the Veteran’s abilities, interests and
aptitudes.
2. Category Assignment
If the Veteran is found entitled, the achievement of a vocational goal is
currently reasonably feasible, and self-employment is warranted, the VRC
must then determine if the Veteran is eligible for a Category I or Category
II assignment (refer to section 9.05 of this chapter for information on
categories assignment for self-employment assistance). Category
assignment is based on information obtained from the initial evaluation
and the preliminary evaluation for self-employment services and must be
determined by the VRC prior to plan development.
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Approval from CO must also be obtained for all Category I assignments
prior to plan development. In order to determine if all other reasonable
employment goals are unsuitable due to the severity of a Veteran’s
service-connected disabilities, it may be necessary to conduct an extended
evaluation before beginning the Fast Track planning process for a
Category I assignment.
3. Fast Track Plan Development
Once the category of self-employment services has been determined and
documented by the VRC, and proper approval has been obtained for a
Category I assignment, the VRC must select the Long-Term Services Track
in CWINRS and develop a Fast Track IWRP using DOT code 999 for the
vocational goal. The VRC must explain to the Veteran that self-
employment cannot be approved until a viable business plan has been
developed and accepted by the appropriate level of VA management.
The VRC should ensure that the following objectives are included in the
rehabilitation plan:
(a) Development and Submission of a Viable Business Plan
The Fast Track IWRP plan for self-employment must include an
objective on the development and submission of a viable business
plan. This objective must include the following:
• A referral to a provider who offers a course to help determine if
self-employment is appropriate, such as Startup Bench 1.0 offered
by the Sales and Management Institute (SMI) at
www.vaaccelerator.com. When selecting a service provider, the
VRC may consider any training facility or provider, such as SMI,
that offers this type of course. The VRC should be aware that
Veterans may receive subsistence allowance while participating in a
course to help determine if self-employment is appropriate.
• A referral to a professional business consultant, either on a
voluntary or contractual basis, as a guide in the self-employment
process.
(b) Training
Training objectives may address any needed remedial training and/or
general education coursework, as well as accounting, business
management and/or economics coursework to provide insight into
certain aspects of running a successful business.
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(c) Services
The services outlined in the plan should address medical,
psychological, and related services, as appropriate, to ensure the
Veteran’s needs are addressed and met.
(d) Case Management Level
Level 2 case management is required for a Fast Track IWRP. Level 2
indicates that face-to-face case management meetings are required at
least three times per year. In addition to these meetings, the
rehabilitation plan must note that additional meetings may be required
to guide the Veteran through the vocational exploration and plan
development process.
NOTE: Fast Track plans do not require the approval of the VREO or other
signature levels.
c. Viability Analysis of the Business Plan
Once the Veteran submits a business plan, the VRC must conduct an analysis
to ensure that it is viable. Refer to section 9.07.b for further guidance on
conducting a thorough viability analysis of the business plan.
d. Outcomes
1. Self-Employment is Viable
If self-employment is viable, the VRC and Veteran will discuss the findings
of the business plan viability analysis in an effort to redevelop the Fast
Track IWRP to a combined IWRP/Individualized Employment Assistance
Plan (IEAP) self-employment plan. The case must remain in RTE status
while the VRC re-develops the Fast Track IWRP. The VRC will select the
Self-Employment Track in CWINRS and develop the IWRP/IEAP self-
employment plan. The plan must clearly outline the Veteran’s goals and
objectives, as well as criteria for measuring the success of those goals and
objectives. The DOT code should be converted from 999 to the specific
identified DOT code. Supplies and services that may be authorized are
dependent on the category assignment. Refer to section 9.08 of this
chapter for further guidance on developing and implementing a self-
employment rehabilitation plan.
2. Self-Employment is Not Viable
If self-employment does not seem viable upon submission of the business
plan, the VRC should give the Veteran the option to redevelop the
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business plan. The VRC may also consider alternative rehabilitation
options, such as traditional employment, if revision will not result in
approval. The case should be left in RTE status while developing a
suitable goal. Once the final vocational goal is determined, then the VRC
and the Veteran will develop and sign a new IWRP. The DOT code should
be converted from 999 to the specific identified DOT code.
If it is determined that self-employment is not viable for a Veteran who
has been designated as Category I, then a comprehensive Independent
Living (IL) assessment must be done. This is due to the fact that it has
already been determined that all other reasonable employment goals are
unsuitable due to the severity of the Veteran’s service connected
disability(ies). Cases being redeveloped from an IWRP to an IILP must be
placed in Interrupted Status during the assessment and plan development
period to avoid exceeding statutory limits.
If the Veteran fails to return to planned services after interruption for plan
redevelopment (i.e., stops participating in redevelopment activities,
becomes medically unable to participate, or disagrees with proposed
program), notification of the intent to discontinue and due process is
required prior to case closure.
NOTE: VRCs may utilize the Self-Employment Job Aid (see Appendix BF, Self-
Employment Job Aid) as a step-by-step guide to providing self-employment
services to Veterans using Fast Track planning procedures. The Self-
Employment Job Aid should be filed in the Veteran’s CER folder to verify
completion of each self-employment step.
9.07 Develop a Proposed Business Plan
a. Business Plan Development
1. Responsibilities
The VRC coordinates services and helps the Veteran develop a proposed
business plan. For existing businesses, the business plan must address
barriers that existed to make the business unsuitable. The Veteran is
responsible for developing the written business plan for VR&E’s
consideration, which means he/she will be doing most of the work
involved. This is important because it will be the Veteran’s business and
the Veteran must be the primary investor in the development of the
business. The VRC will ensure that the Veteran works with a professional
business consultant, either on a voluntary or contractual basis, as a guide
in this process and must provide a list of the information needed to
conduct a thorough viability analysis of the business plan to the Veteran in
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advance of his/her meeting with a business consultant (refer to 9.07.b.1
of this chapter). This will ensure that all questions are addressed initially,
reducing the likelihood that the Veteran will propose an incomplete
business plan. The business consultant may:
• Recommend potential funding resources
• Assist in developing a funding package
• Suggest marketing strategies
• Assess economic viability of the business plan
• Conduct a viability analysis of the business plan
• Recommend actions to increase the viability of the business plan
2. Resources
The following resources are available to assist in the development of a
business plan:
(a) The U.S. Small Business Administration (SBA) is a government agency
designed to provide counseling, advice and information on starting a
business. SBA has district offices located around the country that
provide these services through a variety of programs, including the
following:
(1) Service Corps of Retired Executives (SCORE) is a non-profit
association of volunteer business counselors trained to serve as
advisors and mentors to people who are attempting to start a
business.
(2) Small Business Development Centers (SBDC) are partnerships
primarily between the government and colleges/universities.
SBDCs provide education services to people who are attempting to
start a business. SBDC services include assisting small businesses
with financial, marketing, production, organization, engineering and
technical issues, and feasibility studies.
(3) Veterans Business Outreach Centers (VBOC) are designed to
provide entrepreneurial development services, such as business
training, counseling and mentoring services. VBOCs provide pre-
business plan workshops, concept assessments, business plan
preparations and comprehensive feasibility analysis.
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These services are free and community based. See www.sba.gov for
additional information on programs administered, and services offered,
by the SBA.
(b) The Center for Veterans Enterprise (CVE) assists Veterans who own or
want to start a business by providing counseling services to meet
financial, management and technical needs. CVE also assists VA
Contracting Officers identify Veteran-owned small businesses, which
have priority in the award process in certain government contracting
situations. See www.vetbiz.gov for additional information on CVE.
(c) The Sales and Management Institute (SMI) is an online institution of
higher education targeted toward those who want to succeed as an
entrepreneur.
SMI offers a complete portfolio of coursework in the form of tracks
that establish and build business skills, such as Startup Bench 1.0. See
www.vaaccelerator.com for additional information on SMI.
(d) Other public or private small business consulting agencies, such as
universities, colleges and business development centers.
b. Review and Analysis of Business Plan
1. Addressing Viability of the Business Plan
The VRC must review and analyze the Veteran’s business plan to ensure
that it is viable, and in the case of an existing business to ensure the
barriers that existed to make the business unsuitable have been
addressed. All proposed and formal business plans should address the
following areas in order for the VRC to conduct a thorough analysis of the
plan:
(a) The location and if applicable the cost of the site selected for the
business.
(b) A financial statement describing the availability of non-VA financing,
including the Veteran’s financial resources.
(c) A study of the economic viability of the proposed business plan, which
must discuss the following issues:
• Business location in relation to the geographic distribution of the
population that the business would serve.
• Population traffic patterns, which would bring business to the
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Veteran’s proposed site of operation.
• Probability that the business could serve as a subcontractor to
larger organizations.
• Probability that the business could provide contract goods or
services to VA or other federal agencies.
• Competition the Veteran would face from similar businesses in the
market area.
• Comparison of the operational expenses and projected growth in
gross and net income from the business over the first five years of
operation.
• The Veteran’s ability to absorb losses in the early years of
operation until the business develops an adequate market share.
(d) A cost analysis specifying the types, amounts and estimated costs of
services, initial stocks and other supplies. The Veteran must project
the cost of all items considered essential to the start-up of the
business as part of business plan cost projections even if the items are
not authorized by the VA.
(e) A working outline for developing a market strategy for the business’
services or products.
(f) A detailed description of the business’ operation plan.
(g) A schedule of the training needed for successful operation of the
business.
(h) Results of contacts with the SBA to secure consideration under Section
8 of the Small Business Act of 1953, as Amended.
The VRC must provide this information to the Veteran in advance of
his/her meeting with the agency who will be assisting in the development
of the business plan. This will ensure that all questions are addressed
initially, reducing the likelihood that the Veteran will propose an
incomplete business plan.
2. Responsibilities
The VRC must ensure the following events occur:
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(a) Assessment of the economic viability of the proposed business plan is
conducted, arranged, or contracted.
(b) Arrangement of professional consultations on either a voluntary or
contractual basis to assist with the analysis of all areas of the business
plan to determine viability.
(c) Determination that the Veteran’s business plan addresses all items
listed in section 9.07.b.1 of this chapter, as well as any additional
supporting documentation relevant to the Veteran’s request for self-
employment services. The analysis must clearly address the viability
of the business plan and identify the rehabilitation services needed.
3. Resources for Business Plan Analysis
To assist with the viability analysis of the business plan, VRCs may consult
with a variety of organizations and entities, including, but not limited to:
• Business associations
• Economic development corporations
• College business programs
c. Summation of Business Plan Analysis
VRCs must complete a summation of the business plan viability analysis. This
summation answers the questions outlined in section 9.07.b.1 of this chapter,
as well as any additional supporting documentation relevant to the Veteran’s
request for self-employment services. The summation should clearly identify
the viability of the business plan and rehabilitation services needed. The VRC
must:
1. Summarize information from the business plan analysis into a written
report, either in a VAF 28-1902b, VAF 28-1902n, or in a CWINRS case
note. See Appendix O, VA Forms, for a copy of these forms.
2. Obtain the written report from the contractor/vendor who assisted in
completing the evaluation of viability for a proposed business plan, if
applicable. Include a copy of this report in the CER folder.
9.08 Develop and Implement a Self-Employment Rehabilitation Plan
a. Individualized Written Rehabilitation Plan (IWRP)/Individualized Employment
Assistance Plan (IEAP) Development
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The VRC and Veteran will discuss the findings of the business plan review and
analysis in an effort to develop a combined IWRP/IEAP. The plan must
clearly outline the Veteran’s goals and objectives, as well as criteria for
measuring the success of those goals and objectives. The VRC must ensure
that the objectives of the IWRP/IEAP specifically address all identified needs
to prepare for, obtain and maintain self-employment as outlined in 38 CFR
21.84 and 21.88, including:
• Allocation of resources
• Purchasing of equipment, inventory and supplies
• Training needs
• Required licenses and permits
• Funding needs
• For existing businesses, all barriers that made the business unsuitable
must be clearly addressed
b. Self-Employment Plan Concurrence
Per 38 CFR 21.258, the VREO must approve all self-employment plans with
an estimated or actual cost of up to $25,000 for the total cost of the plan.
The Director of VR&E Service must approve a self-employment plan with an
estimated or actual cost of $25,000 or more for the total cost of the plan.
The VRC must submit the self-employment plan and VAF 28-0794, Self-
Employment Plan Approval Request, to the VREO for approval before
obtaining the Veteran’s signature or authorizing any service. See Appendix
O, VA Forms, for a copy of VAF 28-0794.
If the VREO approves the self-employment plan, then the Veteran and VRC
both sign VAF 28-8872, Rehabilitation Plan. See Appendix O, VA Forms, for a
copy of VAF 28-8872. The VRC will provide a copy of the signed VAF 28-
8872 to the Veteran and place the original form on the right side of the CER
folder.
If the VREO does not approve the self-employment plan, then the VRC must
perform one of the following tasks:
1. Take the recommended corrective action(s) for approval of a revised self-
employment plan.
2. Consider alternative rehabilitation options if revision will not result in
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approval.
If the VREO does not approve the self-employment plan, and efforts by the
VRC did not meet the Veteran’s expectations or request for service, the
Veteran can appeal the disagreement over the development of the plan per
38 U.S.C. 3107 and 38 CFR 21.98. In this situation, the Veteran must submit
a written statement to the VRC requesting a review of the proposed plan and
detailing his/her objections to the terms and conditions of the proposed plan.
c. Case Management
Implementation and provision of services may begin once all approval and
signatures are obtained for the self-employment plan. The VRC will move the
case to RTE status or the case will remain in RTE status if it has been re-
developed from a Fast Track IWRP. During this time, the VRC provides case
management services to ensure that the objectives and goals of the
rehabilitation plan are being addressed and met. Additionally, the VRC will
discuss any concerns with the Veteran and take appropriate action(s) to
address those concerns, ensuring that the Veteran has every opportunity to
succeed.
The VRC must make a determination of the Veteran’s job-readiness after all
necessary services have been provided to successfully establish the business
and to ensure that the business is viable and there are no impediments in
operating the business. Once the Veteran is declared job-ready, the VRC
must change the case status to Job Ready (JR) status. A self-employment
case must never receive employment services only. The only time a case will
go directly from EP status to JR status is if the Veteran is a prior vocational
rehabilitation program participant who qualifies solely for employment
assistance under 38 U.S.C 3117 (refer to section 9.09 of this chapter for
information on limited and specifically defined self-employment assistance).
The VRC must perform the following case management tasks during this
status:
1. The VRC must determine the Veteran’s eligibility for Employment
Adjustment Allowance (EAA) (M28R.V.A.3) and process the payment as
appropriate (M28R.V.B.10). 38 CFR 21.268(c) states that EAA may be
paid at the institutional rate of subsistence allowance for Veterans
participating in a self-employment program.
2. Conduct supervision at least monthly to monitor the Veteran’s progress
and satisfactory conduct and participation.
3. Conduct follow-up contacts for a minimum of 12 months after the
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successful start of a business to ensure that the Veteran’s business is
operational and all needs are addressed and met. The VRC must ensure
that all provided services are sustainable without continued support from
VR&E.
9.09 Limited and Specifically Defined Self-Employment Assistance
Limited and specifically defined self-employment assistance offered under 38
U.S.C. 3117 is only for Veterans who have previously been in a vocational
rehabilitation program either under Chapter 31 or a State Vocational
Rehabilitation program and who would not currently qualify for services under
Chapter 31 otherwise. Veterans who do meet entitlement criteria for Chapter 31
services may receive self-employment assistance depending on category
assignment by following the guidance outlined in this chapter.
a. Chapter 31
Veterans who are employable and previously completed a vocational
rehabilitation program for self-employment in a small business enterprise
under Chapter 31 can receive the following specifically defined self-
employment assistance in accordance with 38 U.S.C. 3117: employment
services that are limited to the facilitation of services required to secure an
SBA-backed loan to buy equipment necessary to establish a business, and
assistance to ensure receipt of the special consideration provided for in
section 8 of the Small Business Act (15 U.S.C. 633(b)).
To provide this assistance, the VRC must conduct an initial evaluation to
determine that the Veteran is employable in an occupation consistent with
his/her abilities, aptitudes and interests. An IEAP is required. Determinations
of employment handicap, serious employment handicap and current
reasonable feasibility are not applicable, unless the evaluation indicates that
the Veteran is not employable. In that situation, entitlement to other Chapter
31 services and assistance must be determined. These limited and
specifically defined services are subject to the 18-month employment services
entitlement limitation.
b. State Vocational Rehabilitation Program
Veterans with the most severe service-connected disabilities who are
employable and previously trained under a State Vocational Rehabilitation
program with the objective of self-employment in a small business enterprise,
can receive the following specifically defined self-employment assistance in
accordance with 38 U.S.C. 3117: license fees, supplementary equipment,
initial stocks and supplies that the VRC determines are necessary to establish
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a business if such supplementary equipment and initial stocks and supplies,
or assistance in acquiring them, are not available through the State program
or other sources.
The Veteran must meet the requirements for self-employment for Veterans
with the most severe disabilities in accordance with 38 CFR 21.257(b), which
states that the Veteran’s service-connected disability(ies) result in limitations
so severe that self-employment is the only reasonably feasible vocational
goal. The Veteran must complete an initial evaluation to determine the level
of employment handicap and if the achievement of a vocational goal is
feasible per the provisions of 38 CFR 21.50. An IEAP is required. The
following conditions must also be met:
1. The Veteran is eligible for VA-sponsored employment assistance.
2. An official of the State Vocational Rehabilitation agency with responsibility
for administering self-employment programs certifies the following:
• The Veteran has successfully completed training for a self-employment
program.
• The assistance needed is not available through non-VA sources.
• The state program’s training/employment plan describes the VA
assistance needed.
3. The VR&E Service Director approves the request.
9.10 Self-Employment Services for an Existing Business
Veterans who have an existing business may apply for Chapter 31 benefits. As
with any applicant, entitlement must be determined before the delivery of
service. See M28R.IV.B.2 for instruction on the determination of entitlement.
When a Veteran with an existing business is found entitled to VR&E benefits
because the self-employment position is not considered to be suitable, services
may be provided to help the Veteran overcome his/her impairments to
employment. If the self-employment position is suitable, which is defined as
employment that is consistent with the Veteran’s abilities, interests and
aptitudes, the criteria for entitlement would not be met. Therefore, the delivery
of Chapter 31 benefits would not be authorized. VR&E cannot provide services
solely to expand or update an existing suitable business. Services must not be
provided simply to expand the business or make it profitable if there are no
disability-related barriers. If the Veteran requires such assistance, he/she should
be notified of the additional resources listed in Appendix BH, Financial Resources
for Self-Employment.
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If the Veteran meets all the entitlement criteria, and the self-employment
position is not suitable, then the criteria for entitlement to Chapter 31 services
would be met. Therefore, the delivery of services may be authorized. The
procedures for Fast Track planning outlined in section 9.06 of this chapter should
be used to develop further information to determine whether self-employment is
viable for the Veteran and the Veteran must work to redevelop his/her business
plan. The business plan must address the disability-related barriers that make
the business unsuitable. If the disability-related barriers cannot be removed, the
business may not be supported, but alternate vocational goals may be
considered.
If self-employment is viable, the VRC and Veteran will discuss the findings of the
business plan viability analysis in an effort to redevelop the Fast Track IWRP to a
combined IWRP/IEAP self-employment plan. The self-employment plan must be
developed in accordance with the procedures outlined in this chapter.
a. Retroactive Induction
Retroactive induction may be considered if the Veteran incurred costs for
training, or other rehabilitation services related to training (i.e., required
program costs), when it is determined that the training and/or services were
reasonably needed to achieve the goals of the rehabilitation plan in
accordance with 38 CFR 21.282(c). Retroactive induction for any prior
training cannot be approved until each of the following conditions is met:
• A vocational goal is identified.
• An IWRP with a DOT code other than 999 is developed.
• The prior training advances the selected vocational goal.
b. Procedures
The following procedures outline the use of retroactive induction for a
Veteran with an existing business who has been found entitled under Chapter
31:
1. Approval for the retroactive induction should be obtained in the same
manner as the self-employment plan. The VRC must submit a written
narrative using VAF 28-1902n requesting the retroactive induction to the
VREO. The written narrative must explain how the training and/or other
rehabilitation services related to training were reasonably needed to
achieve the goals of the rehabilitation plan and should be attached to VAF
28-0794, Self-Employment Plan Approval Request. Other signature levels
must be obtained depending on cost of the plan.
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2. Once approval has been obtained, reimbursement procedures outlined in
M28R.IV.C.2 should be followed to reimburse the Veteran for costs
incurred for training and/or other rehabilitation services related to
training.
9.11 Required Documents for the Delivery of Self-Employment Services
a. The Self-Employment Fact Sheet
The Self-Employment Fact Sheet covers a variety of information, including:
• Identification of supplies and related assistance that VR&E may not
authorize.
• Definition of Category I and II and outline of the types of assistance
available in each category.
• Description of the business consultant’s role.
b. VAF 28-0800, VR&E Program Orientation
The Veteran must sign VAF 28-0800, VR&E Program Orientation, to verify
that the link to the “Operation Boots to Business” video was provided.
c. Preliminary Self-Employment Evaluation
The Preliminary Self-Employment Evaluation provides guidance on gathering
information to determine the Veteran’s suitability and readiness to start a
business.
d. Information Needed to Conduct a Viability Analysis
The information needed to conduct a thorough viability analysis of the
business plan must be given to the Veteran in advance of his/her meeting
with a business consultant (refer to section 9.07.b.1 of this chapter).
e. Summation of Business Plan Viability Analysis
The summation of the business plan viability analysis answers the questions
outlined in section 9.07.b.1 of this chapter, as well as any additional
supporting documentation relevant to the Veteran’s request for self-
employment services. The summation should clearly identify the viability of
the business plan and rehabilitation services needed.
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f. VAF 28-0794, Self-Employment Plan Approval Request
VAF 28-0794, Self-Employment Plan Approval Request, details the submission
request for the proposed self-employment plan for concurrence to the VREO.
g. VAF 28-8872, Rehabilitation Plan
VAF 28-8872, Rehabilitation Plan, outlines the services necessary to obtain
and maintain suitable self-employment.
h. Case Support - CWINRS’ case notes, VAF 28-1905d and VAF 119
VAF 28-1905d, Special Report of Training, VAF 119, Report of Contact, or
CWINRS’ case notes can be used to document and monitor services provided
to a Veteran.
See Appendix O, VA Forms, for a copy of these forms.
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