Small Business Grants in Michigan

Business owners in Michigan know that a tight economy often makes it difficult to find proper funding to expand an existing business or start a new one. But the state is doing its best to improve the business environment in order to attract new entrepreneurs to set up shop there. Part of those efforts are aimed at increasing the funding options business owners have available to them. A good source of information regarding those options is the U.S. Small Business Administration's district office which includes Michigan.

Through the district office's website Michigan business owners have access to a seemingly unlimited amount of information. Everything from tips on starting a business to securing funding is included. In fact, if you were to take all the time necessary to thoroughly research the entire body of knowledge, it would take quite a long time. But that's good because knowledge is power. You should definitely check out the Small Business Administration website before you do anything else.

Grant Money for Small Businesses

Generally speaking, it's not possible to find grants for small businesses coming from the federal government. They simply do not provide them; despite the late-night TV commercials you may have seen advertising "free government money." Any federal grant money made available goes directly to research organizations, educational institutions, and other nonprofits that benefit the public good. Federal law prohibits grants from going to business owners because it directly benefits them rather than the public.

As a general rule, state grants in Michigan work under the same criteria. However, there are two exceptions to this rule. The first exception are two sister programs known as the Small Business Innovation Research (SBIR) Program and Small Business Technology Transfer (STTR). Both programs are backed by the SBA and administered through the state of Michigan. They provide limited grant money to businesses engaged in specific types of research. Requirements are very stringent so it's very hard to secure these grants.

The other exception is a program known as the Idea Cafe. This program is available to any entrepreneur starting a new business who can meet certain criteria. It's a very small grant, at only $1000, but every little bit helps. Along those same lines it's important for you to understand that funding for your business is unlikely to come from a single source. You may need a dozen or more funding sources in order to make your business fly. Be prepared if that's the case.

Your Grant Proposal Is Key

Even if you cannot find state and federal grant money to fund your idea there are nonprofit organizations, philanthropic organizations, and business groups that offer grants in Michigan. The key to securing grants, regardless of their source, is your grant proposal. Your grant proposal is a document you prepare which explains who you are and what you plan to do. Through your grant proposal you are more or less pitching your business in an attempt to secure funding. It stands to reason that the better your proposal the more likely the chances of success.

Writing a grant proposal is not hard, but it does require an attention to detail. Michigan small business grants are limited to the extent that there will be a lot of other companies vying for the same dollars you're after. Therefore you need to make sure you write the best proposal you can. Winning proposals are those that are long on details but short on fluff. If you're not sure how to write a good grant proposal there are samples free of charge online. You can also probably take a course from your community's continuing education program during the school year. Keep in mind when you're writing a grant proposal to include the following items:

• a complete and detailed description of your business and the products or services to be sold
• a demonstration that you thoroughly understand the industry you are venturing into
• a clear list of short and long-term objectives
• concrete plans as to how you intend to reach those objectives
• a description of your expected customer base and how you will reach them
• any other pertinent details that might be specific to your industry or geographic location

If you're uncomfortable doing this yourself you can seek help from your local business development council or a professional grant writing service. Keep in mind that professional grant writers do charge a fee for their services. It will either be a flat fee or a percentage of any grant money you receive. Either way, the services of a good grant writer will probably not come cheaply.

Banks and Other Sources

If you are able to find Michigan small business grants they will be limited in number and size. Therefore, you are going to need other sources of funding to make your business idea fly. The first place to look for alternative funding is your local bank. Through your bank you should have several different options including conventional business loans and SBA loans. The latter are loans provided by the bank but backed up by the guarantee of the U.S. Small Business Administration. These loans are guaranteed to be paid by the government if the borrower defaults making banks much more likely to loan because their risk is significantly reduced.

Another option in terms of loans is something called the micro loan. This type of loan is designed for businesses that only need a small amount of cash for startup or expansion purposes. Typically that amount is less than $250,000. Micro loans are easier to come by because there is less money involved in the transaction. However, if your business idea is one that requires significant amounts of cash up front a micro-loan probably is not in your best interests.

Finally, there's always the option of applying for private equity dollars provided by investment firms and wealthy entrepreneurs. Securing private equity dollars requires a presentation similar to the grant proposal. It's not as formal, being more about explaining your business model than anything else. Nonetheless they are equally important and should be treated as such. If you do manage to secure private equity funding keep in mind that you are selling a share of your company to the investor. The larger the dollar amount the greater his share will be.