Do Small Business Grants Even Exist?

The idea of obtaining a small business grant, for many small business owners, is great. After all, unlike a loan, grants are funds that don't have to be repaid. Many of us have heard various sources proclaiming to have the secret to obtaining small business grants and they may very well have a legitimate listing of grantors (organizations or individuals that award funds to others for a specific purpose).

But if you don't know the real deal about small business grants you may be wasting your time and your money.

The allure of these so-called small business grants is understandable. Small business owners are always looking for ways to minimize their financial risk so why not try to get a grant?

But there is a lot of hype out there, especially via the Internet. This could leave grant seekers scrambling and disillusioned. But the fact is grants do exist. The hype comes in when people start spreading the myth that there is this catchall fund for any business owner looking to obtain some extra money. That is just not the case. It's not as easy as filling out an application and you get a check in the mail. You could get turned down. Your business may not meet the criteria. Or worse, you might have had difficulty even finding a grantor.

First, let's take a look at what type of grants are available. In general, a grant covers the costs for work or supplies for a given period of time such as a grant renewable for two years. And they are typically meant to fund acts or services that improve social conditions, education, community or aid religious or cultural functions in specific areas.

1. Grants to individuals usually for research or education.

2. Grants to for-profit businesses. These are not as numerous as non-profit organizations or non-profit businesses so almost all for-profit business grants come from government agencies. Check out your local agencies for additional details.

There are literally billions of dollars of grant money awarded each year. The people awarded this money have done a considerable amount of background work. Many of the people who seek out grants, or "grant seekers", have professional grant writers to research and write grant proposals. Grant seekers must research companies and agencies first to find out what they have to offer that fits the grantor's specifications.

It's important to realize that many grants that are available cannot be awarded to small businesses because in many cases, a small business is operating for a profit. Foundations cannot give grants to for-profit businesses because they get a special tax exemption that renders this illegal. Knowing that little fact will give you realistic expectations when seeking out grant funds.

Common Grantors

U. S. government through a variety of agencies
Corporations
Foundations
Charities

Grant Seekers Awarded Funds

Non-profit businesses or organizations
Schools
Churches

Businesses that meet the specific criteria of the grantor in regards to location, ownership, services, or employees.

Your chances of obtaining grants for your business dramatically increase if you have a non-profit organization. A common misconception is that non-profit organizations don't make money but this is not the case at all it just means that you operate solely to pay wages, vendors, and purchase necessities. At the end of the year you should break even. So if you have an idea that could improve the lives of others through social works than you could possibly find a grant to help you reach your goal.

If you have a small business and need help getting started then be prepared for the challenges ahead. Finding grants may not be easy but they are out there. Checking with local government agencies is the best place to start. There are local small grants in some cities that are available if you either operate your business in certain areas or your business will benefit particular areas.

Whichever type of business you operate, be diligent in your search and make sure you have read the grantor's requirement carefully. With enough effort, you can have money for your business and reduce your own personal risk of starting a business.