Government Grant Money for Small Business
Many people assume that the Small Business Administration (SBA) is an excellent source for government grant money for small business.
Government Grant Money
The Small Business Administration does not currently have any programs that award Grants to small business owners for start up funding. Many people have a mistaken notion of the role of the SBA as a business resource for start up funding. Although the SBA does sponsor programs that are designed to assist non-profit businesses or minority owned businesses, they do not award grant money. Government Grant money for small business must be sought from State Governments.
What the Small Business Administration does is work with lending institutions to make low cost start up funding available to the new business. They can set up conventional term loans or help establish lines of credit. The backing of the SBA makes these loans more available and lower in cost. However, they still must be repaid and they still add to the financial burden on the expense sheets of the new business.
The major advantage of a Grant is that it is a gift and does not need to be repaid. This is why they can be so valuable in the critical early stages of a business venture as the business struggles to establish itself and capture a share of the market. The availability of funds during this time can be the difference between success or failure.
The major source of Government Grant money for small business comes from the individual states. Most states have an office called Economic Development Commission or something similar. The criteria needed for approval and the amounts and types of grants differ widely from State to State. It is necessary to contact the appropriate agency in your home State to get this information. There is one general rule that applies to all Grant applications. It is essential that you have a well researched and well documented business plan that includes a reasonable profitability goal.
Although the Federal Government has a vital interest and stake in the success of small business, they currently only back and help obtain conventional financing through the Small Business Administration. What Government Grants are available come from the Individual States and Private Foundations. This does not diminish the value of the Grant as a business resource during start up, but it does focus your search to your own State and not the Federal Government.