How many times have you heard the hype about all this free money to start a business that is just sitting there waiting for you to come and get? There are so many ads and articles about free government grants for this or for that but the reality is, it is not really all that easy.
In fact, there are not that many banks that lend money for start up businesses, let alone give free grants! Most of the time banks which do lend money for start-ups do so only for non-profit organizations that are going to be operating specific charities.
Is There Any Truth to Free Grants?
The answer to this question is double sided. While there are literally millions of dollars in grant funds available to small business owners, it is not always that easy to get your hands on it. The money for these grants does not only come from the government but also from other organizations and financial institutions.
The great thing about getting a grant, if you are so lucky, is that it never needs to be repaid. Unlike loans that must be paid off at a variety of interest rates, grants are monies which are given free of obligation. However, when it comes to federal funding for a small business, it is almost non-existent.
Organizations That Offer Grants
The Bank of America Foundation as well as The Small Business Administration do both offer grants, but there are exceptions. If you are trying to start up a flower shop or a bowling alley, you can rule them out as free small business grant sources. However, if you are trying to open a non-profit business such as a thrift shop that will give a percentage of its proceeds to a specific charity, you may have more luck.
If you want to start a business that is going to improve your community such as a safe place for teenagers to come and have good clean fun, this may also be a type of business that one of these organizations might fund, provided you are not doing it for profit. The bottom line is that most government grants are going to be given to those who can prove a beneficial cause and not just your ordinary corner store owner.
Additionally, these organizations often fund businesses that have educational goals in mind. With this being said, you will almost never get 100% of the money you need from one of these grants, therefore you will also need to find alternate sources, such as business loans.
State Grant Sources
The federal government does give the states money to use for grants as they see fit. Because of this it may be possible to obtain a grant through whatever state you live in. For example, if you live in California, you might be able to apply for a small business grant at the Governor’s Office of Economic Development.
Each state has a similar program and you can learn more about your state and what it may have to offer in the way of small business grants by researching on the web.
You might also want to contact your local bank and find out if they have information of which organizations may be offering grants in your state. Applying for and being approved for a grant at state level and sometimes even county level is always easier than trying to apply directly to the government.
Small Business Loans
Now that we’ve covered grants and most of the ins and outs associated with them, let us examine small business loans. Loans, unlike grants, must be repaid at some point. If you are looking to begin a small business you might want to check out the SBA website http://www.sba.com/ as there are a number of financial institutions listed there which actually offer low interest small business loans.
Another great place to get a small business loan is at the bank you have your accounts with. If you are currently a business owner with accounts at a particular bank, it may be easy to obtain some extra capital to start a new venture.
Pay attention to terms and interest rates as these two things will vary greatly with each type of small business loan, and of course with each bank.
Starting a small business may seem impossible to someone who does not have the finances necessary to begin but in reality, all dreams are attainable with enough persistence and diligence.
If you are denied a grant or loan in one place, apply at another. In addition, there is no law which states that you cannot re-apply at the same institution at a later date. If you try hard enough, eventually, you will get the money you need to start your small business.
By: Bradley Barks
About Brad
Brad is our lead researcher and editor - he enjoys business, meditation, being active and always learning - his goal is to successfully help you research, find, secure, and enjoy grants and scholarships.
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