The Holy Grail of Free Grant Money to Launch Your Business!
I often get asked by entrepreneurs to help them locate business grant money. What sounds better than free money? And, we have all seen the infomercials and print ads calling us to get our hands on some of the free grant money floating around out there. Seems smart, right? Why borrow money or give away equity, when the government will give you free money to launch a business?
And, it would be smart if grants were actually available. But, in actuality, there are very few grants programs available. I know, I know, I can hear you asking, “How are all these infomercials selling products around non-existent grants?” I wish I had a good answer for you, but I don’t. The fact is our Federal government doesn’t provide any grants for starting or expanding businesses.
To be fair, there is some very limited grant money out there through state and local programs and for non-profit organizations. The key word here is “limited.” Government grants are funded by our tax dollars and must be approved through Congress. They are nearly always tied to specific congressional agency agendas, such as the U.S. Department of Energy. Therefore, if you are starting a business around alternative energy or a very high-tech industry, it may be worth spending some time to research grants. One place to check is the Small Business Innovation Research (SBIR) Program at https://www.sbir.gov/. In 2014, the SBIR awarded 300 grants for high-tech innovation.
Another source of grants worth mentioning is for service-disabled veterans. Use the SBA’s search tool at http://business.usa.gov/access-financing to see if you qualify for one of these grants.
Finally, there are grants available in certain economically-depressed areas. If you are in one of these areas, you likely know it and have seen some of the money advertised to spur development. If you haven’t seen any of these advertisements but still feel like you’re living in a very slow region, contact your local community development office for information.
Oh, one other thing to keep in mind is that the word “grant” sometimes refers to money that must be repaid. In other words, a more accurate word to use would be “loan.” Misleading? Yes, just a bit.
So, if you aren’t a service-disabled vet, operating in an economically-depressed location, or launching a super high-tech or clean energy company, my advice is to not spend a lot of time chasing after phantom grant dollars. Instead, spend time figuring out the best financing source for your business among the myriad of products and solutions that actually exist – startup loans, lines of credit, invoice factoring, purchase order factoring, SBA loans, angel investments, venture capital, private equity. There’s a whole lot out there waiting for you and worth your time to investigate.