The Truth About Government Business Grants

Have you seen those late-night TV commercials offering you information on obtaining government grants to start a business? The flashy sales person smiles just the right way, points to previous customer testimonials, and pushes his grant information program with all the skill of P.T. Barnum. The problem is federal grants for starting a business are very limited and restricted to various categories.

According to Grants.gov, the online government portal for researching and applying for grants, federal grants for businesses are only available for certain emerging technologies and not-for-profit entities. If your business idea is to develop green technology for home heating or powering a car, there might be something available for you. But if you're looking to start a restaurant, manufacturing company, or just about anything else you'll probably find that you're out of luck.

According to an official from the U.S. Small Business Administration (SBA), common sense dictates that a government agency charged with giving away “free money” for small business start-up would run out of funding very quickly. Therefore they simply do not do it. A statement on the SBA website clearly states as much:

Please note that SBA does not offer grants to start or expand small businesses. Those grant programs that SBA does offer are primarily designed to expand and enhance organizations that provide small business management, technical, or financial assistance.

Where Are Government Grants Given for Small Businesses?

Where grants are given for business start-ups it comes with a long list of restrictions and requirements. For example, the company may be required to locate in a specific area, hire employees from a certain demographic, or restrict its business to a specific product or service. Even when the grants are available they are certainly not free if you consider the quid pro quo nature of dealing with government.

If you think you might qualify for a federal grant the first place to start is the Grants.gov website. You could spend a boat load of money on a grant writing service or one of those TV products, but with a few hours of research you'll be able to tell on your own if there's anything out there before you spend the money.

If you do find a federal grant you're qualified for, you must register as an individual on the Grants.gov website and then apply through the online portal. In an attempt to streamline the federal government is no longer accepting grant applications any other way. In addition, it's helpful to take a training course on grant writing before you attempt to submit a proposal.

Applying for State Small Business Grants

Despite the fact that the federal government doesn't offer grants to start up a business, there is still some good news. They do provide grants to state governments to help them expand business opportunities. The states may in turn use that money to fund grants for business start-up or expansion.

State grants in the past have been available for businesses in the technology, tourism, health care, energy, and environmental sectors, as well as many more too numerous to list. The best way to find out what's available in your state is to visit the state's website and look for its business section. Enough information to get you started should be found there. If not, you might check with your local unemployment office or state representative. They may be able to point you in the right direction.

Using North Carolina as example, their business services website lists half a dozen business grants currently available. One such grant, the Job Development Investment Grants, is designed to help new or expanding businesses whose activities will increase local employment, contribute to the state's economy, and be competitive with similar businesses in neighboring states. The committee charged with overseeing these grants is allowed by law to offer up to 25 per year.

As with all grants, there are stringent requirements needed to apply for North Carolina's Job Development Investment Grants. Individuals wishing to apply would have to contact the state Department of Commerce for specific requirements and application information.

Writing Your Grant Proposal

As a general rule, whether applying for a federal or state grant a grant proposal will be necessary. The proposal requires a detailed explanation of your business idea and plan, how much money you will need to effectively operate for at least two years, what impact your business will have on the local, regional, and state economy, and how you plan to grow and expand your business. Grant writing requires a good deal of knowledge which can be obtained through training courses or SBA information.

In summary, federal grants for businesses start-ups are almost non-existent. Do the research using the grants.gov website, but don't be discouraged if you don't find anything. Check with your state business department to see what is available from them. If you find something, they will provide you with details regarding requirements and application procedures.