Owning and running one’s own business is appealing to many Americans. One of the most important aspects in starting a business is having the funds that will cover startup and operation costs. A good source of funds is the government.
As with loans, small business grants are needed for a variety of reasons, including startup expenses, overhead, salaries, the purchase or renting of equipment or space, training of employees and even patent registration. Unlike a business loan, a grant is considered a gift or endowment that has a specific purpose, and does not have to be paid back by the grantee. They are normally non-taxable and interest-free, and do not require collateral or security deposits. However, the nature of a grant is such that it will have certain restrictions and requirements. There will also be specific conditions and strict reporting standards, as a grant involves the distribution of taxypayer dollars.
It’s important for prospective entrepreneurs to understand that the federal government does not directly administer loans for the purpose of starting or expanding businesses. An individual or group with such a goal should therefore not expect direct assistance from the Uncle Sam. However, the government-sponsored Small Business Association (SBA) does offer an array of loan programs for this purpose, as well as professional advice. Grants funded by the federal government are administered through state and local governments, non-profit organizations or community programs. Often, states will provide grants for certain reasons, including the starting of a business. However, these grants usually require matching funds, or they may be in conjunction with a loan. Some grants are available to women or minority groups, or are geared to areas of specific interest, such as special districts and Native American tribal government regions. A particular small business grant is done in the form of a contest, with the “winning entrepreneur” being awarded a specific grant.
Federal grants are awarded from 26 different government agencies. In seeking a grant for the purpose of starting a business, potential recipients should understand their specific goals. One who desires to start a farming business, for example, should seek assistance from a program that is related to the U.S. Department of Agriculture. One should also be aware of many potential scams that may ask for cash up front before receiving assistance. As with anything, proper planning is the key to obtaining the funds that one will need to start and sustain a business.