Fact or Fiction: Free Money and Grants to Start Your Business

Busting Small Business Myths

Wondering what a grant is and if you as an individual qualify for one?  Check out this informational article written by Nancy Staton of the Georgia SBDC: Click here to read the article!

You’ve finally told your friends and family that you’re thinking of starting your own small business and, like tips to expectant parents, the unsolicited advice has started pouring in.  Are you being fed myths or facts?  Entrepreneur.com is setting the record straight on the Top 10 Small Business myths.  Click here to read the article!

 

Fact or Fiction: Free Money and Grants to Start Your Business

Did you make a New Year’s resolution?  Are you sticking to it?  Immediately following the first of the year, the Northern Kentucky Small Business Development Center gets an influx of calls from people who have decided that an effective way to improve themselves is through self employment.  Many of these folks turn to the SBDC for help which is an excellent first step.  As we begin to assist those interested in starting or expanding a business, however, we find that one of the first things we must do is dispel the myths about free money and government grants.

Right off the top… The U.S. government does not currently provide grants for starting or expanding a small business. However, the government does offer plenty of free help in planning how to start or improve your business and in securing low-interest SBA-backed small business loans. In addition, many states DO offer small business grants to individuals.

SBA does not offer grants to start or expand small businesses. SBA’s grant programs generally support non-profit organizations, intermediary lending institutions, and state and local governments in an effort to expand and enhance small business technical and financial assistance. — Source: SBA

 

The Myths

How many times have you seen a commercial guaranteeing you free government money to start or expand your business?  Others purport to show you how to tap into the hundreds of millions of government and foundation grants available to entrepreneurs and small business owners, none of which ever has to be paid back.

You probably even questioned the legitimacy of these claims because of these promises:

  • The company guarantees you’ll get a grant or you’ll get your money back
  • You’ll receive step-by-step instructions on how to write a winning proposal
  • There are no special requirements and all taxpayers are eligible
  • You’ll get sample forms and extensive bibliography listings and government and private foundation source books and publications

What you are likely to get is grant information with a catch; the organizations listed don’t usually give grants to individuals to start or expand their own business.  And it will be difficult, if not impossible, to collect on the “money back” guarantee. Unfortunately, the SBDC has worked with dozens of clients who have been taken advantage of through such grant schemes.  The reality is- there is no governmental agency that is dispersing money to individuals wishing to start a business, regardless of age, ethnicity or economic status.

The Truth

Ninety-five percent of small businesses are started with personal savings, loans from friends or relatives, along with commercial loans.  Usually, the owner must invest a combination of his/her own money and collateral, because 100% financing is not available.  However, there are numerous loan programs that cater to the small business community.  The consultants at the Northern Kentucky Small Business Development Center are knowledgeable about different funding opportunities and can help small business owners identify legitimate sources of potential funding.

Public and private grants are available for small businesses, but they are specifically designated for highly technical areas of industry, for schools and training programs, and other state and local government agencies.  The Kentucky Small Business Development Center developed a detailed brochure that presents the truth about grants and dispels the myths that surround the notion of free money.  This brochure also provides information on legitimate grant resources and offers suggestions about finding money sources and the application processes.  This publication can be downloaded at http://www.ksbdc.org/wp-content/uploads/file/grants.pdf.

The Advice

The old adage, “if it sounds too good to be true then it is,” holds merit in this situation too.  However, if you have ideas for a developing a new business, don’t abandon them.  Even with the current credit crunch, there still are lending institutions and investors that are very interested in financing solid businesses that have great potential. The Northern Kentucky SBDC can assist you in conducting a feasibility assessment that will help you determine if your business idea is one that may interest lenders.

The Northern Kentucky Small Business Development Center is part of a network of 17 service centers located throughout the Commonwealth that helps start-up and existing businesses succeed by offering high quality, in-depth and hands-on services. These services include: no-cost confidential business consulatations, affordable business workshops and seminars, research to make informed business decisions and other valuable resources. For more information about the Northern Kentucky SBDC visit www.ksbdc.org or call 859-448-8801. The SBDC is conveniently located at 305 Johns Hill Road, Highland Heights, KY 41076.

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