There is something in the business world that keeps the hopes of every small business owner hoping, the grant, also known as free money. Investors love to give them and business love to receive them. The only problem is finding out how to apply for grants, what type to apply for and what qualifications your business needs to get them.
The most common grants are ones provided by the federal or state government. These are often high dollar grants and have many different requirements to enter the bid process. While there are still no direct small business grants available from the federal government, many state development agencies offer direct small business grants and other types of financial assistance designed to encourage and assist entrepreneurs in starting or expand a small business.
Small business financing incentives are an important part of the economic growth plan of every state in the nation. Some states even offer small business grants. Other small business incentives could include subsidized rates on SBA loans as we previously discussed, tax breaks which we will get to and participation in business “incubator” programs also soon to come.
Businesses that get government grants are subject to strict government oversight and must meet detailed government performance standards during the duration of the project and funding period of the grant.
All project expenditures must be strictly accounted for and detailed audits are conducted by the government at least annually. All granted funds must be spent. Any money not spent goes back to the state. Detailed program goals must be developed, approved and carried out exactly as specified in the grant application. Any project changes must be approved by the government. All project phases must be completed on time. And, of course, the project must be completed with demonstrable success.
Failure on the part of the grant recipient to perform under the requirements of the grant can result in penalties ranging from economic sanctions to prison in cases of improper use or theft of public funds.
By far, most government grants are applied for and awarded to other federal agencies, states, cities, colleges and universities, and research organizations. Few individuals have the money or expertise necessary to prepare adequate applications for federal grants. Most active grant-seekers, in fact, employ full time staffs to do nothing but apply for and administer federal grants.
The plain truth is that with federal funding cutbacks and competition for grants becoming more intense, seeking a federal grant always requires a lot of time and potentially a lot of money up front with no guarantee of success.
I know that this may have just burst your bubble a little however, knowing the difficult process you may be encountering is always a good idea. Check in next time for when we discuss the exact process for applying for a grant.