The Small Business Administration released Q1 2026 lending data this week showing veteran-owned business formation up 31 percent nationally year over year, with Tennessee, Texas, and North Carolina the top three states by absolute new applications. Tennessee added 4,847 veteran-owned new business filings in Q1 against 3,701 a year earlier, with Davidson, Rutherford, and Hamilton counties leading the state-level count. The data covers veterans certified through the SBA's VetCert verification program, which replaced the older VOSB and SDVOSB programs in 2023 and now covers 487,000 verified businesses nationally.
The capital flows are equally meaningful. SBA-backed loans to veteran founders totaled $1.4 billion in Q1, up 24 percent year over year. The average 7(a) loan to a veteran-owned business was $271,000, slightly below the all-comers average of $284,000, while delinquency rates on those loans ran at 3.4 percent versus 4.1 percent for the general 7(a) book. The 504 program, which finances real estate and equipment purchases, saw $612 million in veteran-borrower commitments in Q1, with average loan size of $584,000. Three lenders dominated the veteran 7(a) book in the quarter: Live Oak Bancshares, Newtek Bank, and Huntington National Bank.
Several factors are pulling the trend. The DoD SkillBridge program, which lets active-duty service members spend their final 180 days in industry internships, certified 18,400 participants in 2025, up from 11,200 in 2023. Many of those internships convert directly to entrepreneurship rather than W-2 employment, with a 2025 IVMF Syracuse study tracking 47 percent of SkillBridge alumni into small business ownership within 24 months of separation. The VA's Veterans Business Outreach Center program added 14 new locations in 2025, including a Murfreesboro site that opened in October and has already served 247 clients.
Tennessee specifically is doing two things well. The state's Department of Veterans Services launched a Boots to Business Reboot Tennessee program in 2024 that pairs each new veteran founder with a 6-month mentor. The program has graduated 1,247 founders and reports an 87 percent business survival rate at 24 months, materially above the national veteran average of 71 percent and the all-comers average of 64 percent. The program is funded by a state appropriation of $4.2 million annually, plus pass-through SBA grants of $1.8 million. Murfreesboro, Clarksville, and Memphis are the three cities running cohorts in 2026.
Industry distribution among new veteran founders matters for the wealth-building math. Roughly 31 percent of Tennessee's Q1 veteran founders are in trades and contracting (HVAC, plumbing, electrical, construction), 24 percent in professional services (consulting, training, IT services), 18 percent in food and hospitality, 12 percent in transportation and logistics, and 15 percent in retail and other categories. The trades concentration matters because trades businesses sell at higher EBITDA multiples to private equity rollups than service businesses, with current Tennessee mid-market HVAC and plumbing transactions clearing at 5.4 to 7.2 times trailing EBITDA per Q1 BRG transaction data.
For Black veteran founders specifically, the Q1 numbers also moved. The SBA reported 9,847 Black veteran-owned business filings in Q1 nationally, up 38 percent year over year. SBA 7(a) flows to Black veteran founders totaled $487 million in the quarter, with delinquency at 4.2 percent. Tennessee added 884 Black veteran-owned filings in Q1, with Memphis leading the state at 412 and Nashville at 287. The Memphis numbers are pulled by the local Black-owned business accelerator at LeMoyne-Owen College, which graduated its third veteran cohort in March with 38 founders and a combined seed-capital raise of $4.7 million.
Three programs are worth knowing for any veteran reading this. First, the SBA Veterans Advantage 7(a) program waives the upfront guarantee fee on loans of $150,000 or less, which saves the borrower roughly 2 to 3 percent of loan principal at origination. Second, the Vetrepreneur Tax Credit, which Congress made permanent in the December 2025 budget, lets veteran-owned C-corps and pass-through entities take a $5,000 nonrefundable credit in the first three years of operations against federal income tax. Third, the Boots to Business one-day intro course is run quarterly at every major military installation including Fort Campbell, with the next Tennessee dates June 14 and September 22.
What to watch in Q2. The May 12 Senate Appropriations markup includes a 14 percent expansion of the SBA's Veterans Business Outreach Center budget, which would fund another 18 to 22 sites including expected new locations in Knoxville and Chattanooga. The DoD's FY27 SkillBridge expansion proposal targets 31,400 participants annually, with the rule package scheduled for public comment in June. And National Veterans Small Business Week falls November 2 through 8, with Nashville's annual veteran founder summit confirmed at Music City Center for November 6.