Have you heard from commercials, online ads, or friends that there are a lot of small business grants out there, just waiting for someone to apply for them? This is one of the most common questions that business owners or startups ask. There are a lot of scams and false information out there, so this article intends to help you learn the truth about grants and free money.
The Facts About Grants
The fact is, no government agency is giving out free money; 100% financing is not available. According to the KSBDC, less than 5% of businesses are started with help from government grants. There are a few government grants available, but they are usually not for 100% financing of the project costs, and they are for very specific programs: high technical areas of industry, schools and training programs, and other government programs.
If you happen to find a grant that fits your business category, there are very specific requirements for even applying for the grant. Grants are given from a variety of public (government) sources, as well as private sources, so there are usually eligibility requirements for them. Also, if you happen to secure a grant, there are required activities you are responsible for carrying out... and if you don't then you may have to pay back the grant money.
Legitimate Grant Resources
- Federal Government grants are all listed on this official website.
- Private and community foundations that you can search for.
- A resource to identify types of assistance out there and info on how to write a grant proposal.
- Various resources about Federal grants.
- A resource for general research and private funding.
Beware of Scams
Always be wary of anyone or any business that is offering you a chance at free money. This is especially true if they are asking for a fee upfront or money that you must pay in advance. Typically those giving out grants do not ask for a fee to apply for the grant. These scams may also ask for sensitive information. Do not give them any of your personal information, especially your social security number. Just because a business or individual advertises in national media outlets or on the internet, it does not mean they are legitimate. A good idea is to check with the Better Business Bureau and/or the state Attorney General's Office for complaints before talking with a company who is offering their services in regards to grants.
Anybody can claim that "over 1 million entrepreneurs received grants last year to start their business," but that is simply not true. Most startups have to borrow funds from friends and family, receive a bank loan, or invest some of their own cash. Grants are very inciting, because who doesn't like free money! Yet it is very hard to get a grant as a startup and there is not much out there for you. If you have any question as to weather or not a grant you are looking at is legit, contact your local SBDC office and they can help assist you.