Starting your own business is a labor-intensive venture that primarily requires money. A budding entrepreneur can acquire business capital in a number of ways. One method that has been advertised throughout the Web and on television is grants. The prospect of free money always sounds good, but being prepared with the facts will save time and frustration in the long run.
Not Really Grants
The vast majority of business grants are not business grants at all. Most are loans, tax incentives or loan guarantees. The government grants that are given to businesses are normally for disaster relief or a contract with the government to create goods and services. Another way to receive federal grant money is to create a certain number of jobs in the area where the grant money is being given.
Government Business Grants
By and large, the federal government doesn't give grants to start-up businesses or to expand an existing business. Grants from the federal government are given to non-profit entities for scientific research and development, law enforcement, education and so forth.
However, grants are given through state programs that then can be given to specific businesses that are involved in endeavors pertinent to the grant--for example, a company that creates energy-efficient technology.
Even so, it's usually not free money and the business is required to match the funds with some other financing option like loans. In the rare instance that the grant is given outright, it's normally because the business has invested much time and money in the community.
Foundation Business Grants
A better and more prolific source for business grants is through foundations. Again, the chances dwindle by virtue of it being a for-profit venture. Many foundations are set up for the express purpose of giving money to those who are pursuing endeavors that line up with its interests. You may have to convince the foundation that your pursuits line up with its endeavors. The advantage of acquiring foundation grants is that you can apply for grants throughout the country instead of being confined just to your state.
Evaluating Your Needs
Applying for a business grant adds to the already cumbersome work of building a new business. Before diving into the world of business grants, there are a couple of points to consider:
1. If you're going to do this yourself or hire a grant writer.
2. If you have the extra time to commit to learning the process and if you want to take time out from building your business to learn the process.
3. If this something that will be an ongoing facet of your business or a one-shot deal.
Knowing the answers to these key questions will help to map out your business-grant strategy.
Where To Look
If you decide attempt to pursue a business grant, expect a lot of time researching the proper grants for you. Every grant has specific requirements in order to qualify. Missing a small detail in the application can make or break whether you're given the money.
One place to research is the Catalog of Federal Domestic Assistance (CFDA). It lists the relevant programs but gets updated only once or twice a year. Foundationcenter.org lists foundations by state and general information. You can subscribe on a monthly basis for more detailed information. Your library may have access to the Foundation Directory Online, which lists 90,000 foundations with details and a way to filter search criteria for free.
