Category: Small Business

Are There Government Grants for Small Business Owners?

When it comes to government small business grants there are two camps. The first camp says that federal and state governments give away lots of “free” money to help you start or expand an existing business. The other camp says there are no such grants available. So which one’s right?

If you want to see for yourself you can logon to the Small Business Administration or Grants.gov websites. But we’ve already checked into it and we’ll tell you upfront the second camp is correct. Federal and state governments do not give small business grants except under extremely rare conditions. About the only time government business grants become available is when there’s a vested government interest in promoting a specific technology. Other than that, business owners are out of luck.

Why do people sell books offering information on government grants?

Some 30 years ago a rather industrious author figured out that people watching late-night television would believe just about anything they were told. This enterprising individual decided to publish a book highlighting all the “free” money available from the government including so-called government small business grants. The author put together some very convincing commercials, ran them on late-night television, and sold millions of books. Unfortunately, not a single purchaser of his books has ever found grant money available for small businesses through a federal government institution.

By the same token, there are lots of websites that come up in a Google search if you run the phrase “small business grants.” Unfortunately if you start to look at those results you’ll quickly find that you’ve wasted several hours coming up with information that is completely useless to you. Why would these website owners do this? Because, like the author of the previously mentioned book, they generate income when you visit their site and click their links. If they’re promising government small business grants, don’t believe them.

Are there any small business grants of any kind?

The good news is that from time to time it is possible to find small business grants from places other than federal or state government. For example, sometimes local governments offer business grants in combination with tax abatements as a means of stimulating economic growth. They are hard to come by during these tight economic times, but you can find them every now and again.

Secondly, private business trade groups and foundations sometimes offer small business grants as a means of helping people in genuine financial need. These types of grants typically don’t equate to tens of thousands of dollars mind you, but even a couple thousand dollars can be beneficial when you’re starting or expanding a business. The only way to quickly and effectively find these opportunities is to do an Internet search on private grant makers.

If I can’t find grant money how do I fund my small business?

If you’re willing to accept funding other than grants, that’s where you’ll find you have plenty of choices. From the government standpoint you have small business loans backed by the Small Business Administration and other government agencies. And in fact, the SBA website is one of the best resources for finding those loans. The SBA does a good job of keeping users abreast of all sorts of loan programs available throughout the United States.

Next, you can check with your local banks and chamber of commerce as well. If local banks are unable to help with financing they probably can point you to other institutions that can. The same thing goes for the chamber of commerce.

Finally, you can consider accessing private equity investors. Just do an Internet search on private equity companies and start looking at some of the results. Just about every private equity firm offers a link on their website whereby you can contact them for more information about attaining funding.

How do I obtain small business loans or private equity funding?

Applying for business funding is somewhat different than getting a personal loan. While you may have to fill out a formal application, more important will be your business plan. When you submit a business plan you are essentially explaining to the lender or private equity investor why your business is worthy of funding. There are no black and white rules for preparing a business plan, but there are plenty of free samples online that will help you put one together.

In closing, if you do find small business grants available from private organizations you’ll also need to submit a grant proposal along with your business plan. If you don’t know how to write a grant proposal there are as many resources available for that as there are for writing business plans. If you’re still not comfortable and don’t mind spending the money, there are organizations that specialize in writing grant proposals.

How to Get Small Business Grants for Women

Small business grants are a great way for women to get started in the world of business. When they’re available, and when you can find them, they might just be the bridge between traditional lending and personal financial resources needed to get a business off the ground. In the following paragraphs we’ll discuss small business grants for women and how to get them.

What’s In The Guide?1. Searching for state grants

2. Where to find private grants

3. Other sources of business funding

Before we get to how you can find grants for women starting a business you need to understand that the federal government does not make grants for business. Despite what you may have heard from friends or relatives the federal government is prohibited by law from providing small business grants except in very rare circumstances. When money does come from the federal government it’s usually in the form of low-interest loans from the small business administration. If you need clarification on business grants from the federal government feel free to check the Grants.gov website. On that website they make it abundantly clear that Washington does not provide small business grants of any kind.

State Grants

The good news where the federal government is concerned lies in the fact that they do provide money to the states via block grants. States are free to distribute that money as they see fit as long as it falls within the parameters of the grants. So if the federal government provided a block grant to your state as a means to promote business, your state could then turn around and give individual grants to female business owners. This is not at all uncommon, by the way, though federal money has been a bit hard to come by in recent years.

Keep in mind that state grants almost always come with strings attached. For example, a state may offer grants for women business owners only for businesses that are located within a general geographic location. These locations, also known as economic development zones, have been targeted by your state as being in need of economic growth. State officials use grants as an incentive to get people to open businesses in these areas.

Local and Private Grants

On occasion there will be small business grants for women available from your county or local municipality. This money is typically provided through grants from the state or through private contributions. Like state grants local money usually also comes with some strings attached. One example would be tying a small business grant to a tax abatement with the company receiving it agreeing to hire so many employees within a certain amount of time. If the company fails to meet its end of the bargain tax abatement will be ended and it may, or may not, have to repay that grant.

Private grants come from a variety of sources including trade organizations, local business groups, and female advocacy organizations. These types of grants are usually offered on a limited basis because they rely on private contributions. At the same time they can be helpful if the organization writing the grant also provides business assistance.

Combining Funding Sources

It’s important for women wanting to start a business to be prepared for a variety of funding sources. In other words, even if you’re able to find grant money it’s unlikely to provide all the funding you need for your first year of business. And by the way, you should plan on having at least one year’s worth of funding before opening the doors. It takes the average American business three years to start turning a profit, so you need to be adequately funded right from the start.

In addition to grant money you’ll need to get business loans from either a bank or the Small Business Administration. In order to get one of these loans you will have to convince lenders that your business idea is worth taking a risk on. This involves putting together a comprehensive business plan which explains your goals and vision, your company’s purpose and mission statement, products and services you intend to sell, your target demographic, and how you will market to that demographic group.

In addition to banks and the SBA you might also consider private equity financing. Private equity is a scenario in which a group of wealthy investors has pooled their money in order to invest in companies like yours. In exchange for their investment they take ownership of a certain portion of your company. Don’t let this scare you, however.

Private investors are very skilled at what they do and they have no intention of losing money on your business. They will do whatever it takes to make sure you succeed — so that they make money. When it’s time for them to sell their interest (usually 3 to 5 years down the road) you’ll be able to buy it back or let it be sold to the highest bidder.

Remember, if you’re starting your own business your future success rides in part on making sure you have proper funding. Before you spend a single dime make sure you have enough funding in place to allow you to make a legitimate run at succeeding. Nothing is worse than procuring only part of the funding and then watching the business collapse. If small business grants for women can be helpful, then by all means apply for them.