Facts on Government Grants for Starting a Business

.One of the common misconceptions — and scams — about starting a business is the wide variety of available grants for starting a business. Beware of unscrupulous marketers (even book authors) who are selling information on where to find grants, directing buyers to organizations that provide grants but not grants for starting a business.

Here’s what the Small Business Administration has to say about grants for starting a business:

SBA does NOT provide grants for starting and expanding a business.

Government grants are funded by your tax dollars and, therefore, require very stringent compliance and reporting measures to ensure the money is well spent. As you can imagine, grants are not given away indiscriminately.

Grants from the Federal government are authorized and appropriated through bills passed by Congress and signed by the President. The grant authority varies widely among agencies. SBA has authority to make grants to non-profit and educational organizations in many of its counseling and training programs, but does not have authority to make grants to small businesses. The announcements for the counseling and training grants will appear on grants.gov. If Congress authorizes Specific Initiative Grants, organizations receiving such grants will receive individual notifications.

Some business grants are available through state and local programs, nonprofit organizations and other groups. For example, some states provide grants for expanding child care centers; creating energy efficient technology; and developing marketing campaigns for tourism. These grants are not necessarily free money, and usually require the recipient to match funds or combine the grant with other forms of financing such as a loan.

The amount of the grant money available varies with each business and each grantor.

The main government listing for grants is the Catalog of Federal Domestic Assistance and do an advanced search for grants available to small businesses. You won’t find any for starting a hair salon, but there are a number of grants available for research and and those that “sparks innovation.” Then apply for the grants that you find at Grants.gov

Also check your state government for grants available. For example, District of Columbia’s Office of Partnerships and Grants Development (OPGD) offers the Grants Information Data System (GIDS)-a database of current city, federal and foundation grant opportunities available to DC-area nonprofits and community-based organizations.

And if you do find some grants, be prepared for the voluminous paperwork and reporting requirements required by these organizations and government agencies. You may find yourself needing a support staff just to fulfill all the necessary paperworks.