Small Business Grant Money
Every small business owner dreams of starting a company with a grant -- an award that is not paid back -- but even if you receive one, you may still need a source of funding. Most companies need a consistent line of credit, because of a lag time between buying stock and getting payment. While you should always look out for grant money, it is usually a pipe-dream for most entrepreneurs.
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Misconception
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Small business grants are not widely available, despite many advertisements claiming you can receive money to start a business by paying a fee to a company. The government almost never funds a new small business and the businesses that do receive grants are almost always a nonprofit, educational business or company working in a very niche field. Also, most grants come with the stipulation that the company match the grant award amount and put it into the project.
Finding Grants
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The most likely source of small business grant money is from states and local governments or private foundations. Large companies often have grant money available to start a small business anywhere, but it probably won't be enough to rely on it as a business's sole source of funding. Most private grants are for no more than $5,000. State and local governments might have more discretion to distribute funds to small businesses than the federal government, or they might give funding to local nonprofits to boost the economy in certain communities. Either way, most of these grants are not heavily advertised, so you will probably have to call up government agencies or companies and ask about grant opportunities.
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Alternatives
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A more likely scenario, unless your business meets the specific qualifications of a grant, is to obtain financing through a loan or investment capital. Small Business Administration loans -- backed but not originated by the SBA -- are a huge source of small business funding because the SBA backs these loans when a bank turns the borrower down for a traditional business loan. You could also pitch your idea to investment firms.
Tips
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Always shoot for grant money over loans or selling shares in the company, but prepare to wait months or years if you hope to start a business only with grants. Unless you are a nonprofit, however, you would do best to believe that it is impossible to start a small business with a government grant, suggests the College of Southern Idaho. Search Grants.gov, a catalog that contains all federal and most state and local grants. If you cannot find grant money, the very least you can do is not pay fees to apply for a grant, although there are some legitimate monthly listings of grants that require a subscription fee.
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