Every business looking to apply for free grants should know the distinctions between grants and other forms of financing. While a grant may not accrue interest or require a commission to the provider, small businesses should understand the subtleties of accepting grant money from state and federal agencies.
Forms Of Small Business Financing
An entrepreneur looking to apply for free government grants should understand how grants stack up with other forms of financing. The traditional route to financing a small business venture is to head down to the nearest commercial bank and fill out an application. Bank loans may offer quick money at the outset, but business owners are beleaguered by monthly payments that can be difficult to complete on time. Small business grants do not require payments of interest or closing fees, making them an ideal option for cash-strapped innovators.
Small businesses may look to venture capital firms if they have been tapped out at commercial lenders. Venture capitalists look at business plans, products, and current personnel before handing out checks to emerging businesses. While venture capital may sound appealing to confident business owners, the consequences of accepting this money can harm a growing enterprise. A small business can avoid giving stock options, creative control, and annual commissions to financiers by applying for free grants.
Explaining Small Business Grants
A small business grant is an infusion of interest-free money from a public or private provider to a business startup. Most grants are used to convert product ideas into businesses, convincing inventors and thinkers to get into the business world. State agencies and corporations use small business grants to help emerging companies bankroll new product lines that fill needs in the marketplace. Non-profit laboratories, schools, and research firms use business grants to fund experiments and projects that yield new information rather than new products.
Advantages Of Small Business Grants
The obvious advantage of a small business grant is that an owner can navigate around lending institutions to finance his venture. A free government grant may require regular reports to the providing agency, but owners are willing to be subjected to a little oversight in favor of interest-free money. Once a business receives a small business grant, an owner can apply for additional grants using his proven track record to demonstrate competency.
Small businesses can also avoid the demands of venture capitalists, investors, and stock manipulators by applying for free grants. Venture capitalists are investing their money because they expect to earn money in return, requiring stock options and regular commissions on their funds. While a business can earn quick capital with a stock offering, the result is that every investor expects a role in deciding the course of the company. Since free government grants are funded by taxpayers, business owners know that they are responsible to the public at large rather than a fickle group of investors.
The final benefit of applying for a free government grant is access to resources and programs through the providing agency. Most states have business incubator programs where business startups have access to low-rent offices, managerial courses, and other resources that are necessary to ensure long-term viability in the market. A grant through the National Institute of Health or the Department of Defense may connect a non-profit group to resources unavailable in the private sector.
Types Of Small Business Grants
In the same way that business startups are one-of-a-kind, the free government grants available online are not one-size-fits-all. Small business owners have to understand that the federal government offers free grants to non-profit agencies and supports for-profit businesses through government contracts. The federal government sends small business funds to all 50 states, which are then distributed to for-profit and non-profit ventures to spur economic growth. The distinction between commercial and non-commercial ventures adds some more complexity to the search for free government grants.
As free government grants begin to tighten their requirements from applicants, business owners will begin to see provisions for matching grants. A matching grant requires a business owner to put up as much money as the grant amount to demonstrate some liquidity. The matching requirement is designed to weed out bad business owners and save taxpayer money from going to waste.
Government Rationale For Business Grants
The average taxpayer may wonder why local, state, and federal agencies use public funds to stimulate private industry. The primary reason for free government grants is that public agencies are the only bodies that can provide substantial funding to thousands of different businesses. In a state like California with thousands of new startups each year, there is no business with the time or inclination to filter out applicants and provide general funding. State and federal agencies also have the infrastructure to audit grant recipients and review applications in large numbers to expedite delivery of grant money.
State and federal agencies offer grants to strengthen the economy by producing home industries. The United States has gone from a net exporter to a net importer over the last three decades because of the lack of strong businesses built from the ground up. As each state invests millions of dollars in small businesses, there is the potential for millions of dollars to return each year in profits and taxes.
Online Resources For Small Business Grants
Before a small business owner applies for free grants, a good online resource to learn about grants is the Small Business Administration (SBA) website (http://www.sba.gov/). The SBA organizes all the information needed to apply for state, federal, and private grants in one area. An owner who wants to know how to write a grant, gather information needed to complete a grant application, and maximize funding can learn a lot from the SBA. The SBA also offers information on low-interest government loans and other financing programs that can be used in lieu of free government grants.
A business startup is more likely to get funding from a state agency than the federal government. Most states offer business incubators, loans, and small business grants through their Departments of Commerce. From the Oklahoma Department of Commerce (http://www.okcommerce.gov/) to the Rhode Island Department of Labor and Training (http://www.dlt.state.ri.us/), a local business can expand its customer base and improve the state economy by applying for government grants for free.