You have probably heard that there is free money out there to be given away to small business owners to spend however they want. This is not necessarily true—most small business owners obtain financing through loans and their own personal funds.

The difference between a grant and a loan
A grant is essentially “free money” that does not have to be paid back. A loan is “borrowed” money that will need to be repaid, often with interest. The government’s grant program is very limited and described more below. The government’s loan program is through the Small Business Administration (SBA). SBA loans are guaranteed loans made through local lenders.

While grants provide money that does not have to be repaid, they often require the recipient to provide matching funds. For example, you may need to come up with $10,000 before the grantor will give an additional $10,000.

Are there any grants out there for your business?
Grants all have different requirements for eligibility. However, the majority of grants are given by community foundations to groups of people who are looking for money to support a good cause. Examples may be:

• Scientific or medical research
• Social service or philanthropic organizations
• Educational institutions
• Religious organizations

The Small Business Innovative Research Program is the federal government’s grant program. It focuses on research and development for the commercial sector.

In order to receive grant funding, your organization usually has to be structured as a non-profit, with tax-exempt status. See IRS publication #557 for details on obtaining such status.  Since most grants originate from foundations you should identify your regional community foundations.

Most grants do not fund the usual retail, service, or manufacturing business idea. This is not to say that there is not something out there that will fit your needs. However, it is the responsibility of the business owner to do the research.

The Grant Proposal or Business Plan
For any grant or loan, you will need to write a business plan or proposal. Any lender or grantor will want to know the reasons why they should give or lend you money. Most SBDC’s offer free counseling services to give guidance in writing a business plan or advice on writing a proposal.  Your local library is also a great place to find books on writing grant proposals.

Thank you!  Be well.

 P.S.  I’ll be adding online grant resources and training here soon. If you’d like to be notified when the online training or book becomes available, just sign up for my newsletter.  I’ll be giving my subscribers at least a week or two early notice and a discount code, too.  Check your email a few minutes after subscribing, and be sure to click the “confirm” link.

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