Are Small Business Grants Real?

If you’re interested in finding small business grants it means you’ve probably seen at least one late night TV commercial about all the free grant money you can get to start the business of your dreams… It sounds exciting and you want it to be true but your smarter conscience is still wondering what to believe. There were probably some semi-realistic sounding testimonials being delivered on the TV screen… “Free Money For Your Business!!” was flashing across the bottom as a cute couple, drinking wine, sitting on a sofa in a cozy fireplace setting would smile and reflect on how they got $50,000.00 from the government to start a business… All after paying only $400.00 to go to a seminar! Sound familiar?

Hopefully you’re reading this in time to save yourself from falling victim to a common blunder. We’re here to come crashing in with a truck full of reality and tell you that this is MAJOR HYPE and these advertisers are taking a small grain of truth and twisting it into a hugely exaggerated scheme that never stops perpetuating. Even after reading articles like this, people will still fall for convincing commercials and waste money on information about small business grants that don’t exist. Why do business minded people – no nonsense thinkers – believe in the Easter Bunny? The reason this scam works so well (and never goes away) is because the notion of small business grants existing is so alluring – people really want to believe that there is a way around the hard work of raising capital. Plus, it does make a little bit of sense that the government would support entrepreneurs by providing them free start-up money – at least a little bit. After all, if a business ends up being successful it helps the economy because it creates jobs. This means more people paying taxes and into social security. Also, the business may sell products/services in states that charge sales tax – another return for the government.

Despite these few plausible elements, do not fall for claims that you can get free money to open a for-profit business such as a restaurant, or launch a clothing line, or to start or expand any for-profit business because there is almost no truth in it. If you’re wondering how so many advertisers can get away with running misleading ads it’s because there are a few small business grants available to highly specific industries and only to very small groups of people. It is very competitive to pursue this money and so difficult to receive it’s not even worth calling “free money”. For example, once in a while, a local government agency in a small community will provide free money to a business. This will happen only in a very poor area with a severe underemployment problem and only if there is a guarantee that a significant number of jobs will be created. These opportunities are rare and disappear quickly.

Also, the government will provide small business grants to scientists dealing with the research and development of highly specific technology that the government is interested in. For example, you can get up to $100,000.00 for research from the Small Business Innovative Research program to develop a method for capturing a broken down satellite and repairing it in mid-orbit. Hey! That’s exactly the business you had in mind when the TV commercial said you could get free money for business, right? Right… The application process for these grants requires extensive scientific proposals proving the technology is plausible and the money is given only to some of the most brilliant minds in the country. The notion that this money is available to ordinary citizens looking to start a business is a joke.

American tax payers would never allow their government to give billions of tax dollars away to small business owners trying to capitalize. It would cause a major uproar because in doing so the American people would be absorbing all of the financial risk for these businesses. And approximately 90% of all start-ups go out of business almost immediately. That’s a huge risk. Businesses that end up successful are capable of raising capital the hard way – with well-prepared business plans, taking out loans, bringing on investors, raising venture capital, developing great products and services, tapping into niche markets, discovering unique advertising methods and the likes. When ordinary looking people on TV give success stories and say they “got $100,000.00 from the government to start a business” they never mention that it was NOT a small business grant, it was a small business loan.

Just because you don’t have the cure for cancer and therefore can’t get a small business grant it doesn’t mean everything is hopeless when it comes to getting financial help. It’s a great time for business right now and there are plenty of other options. The government Small Business Administration guarantees billions of dollars in small business loans every year. This money is lent to you with the expectancy of repayment, but if you can get the loan on good terms and it’s enough money to get your business launched it’s a great deal. Plus you may not need as much money as you think you do. Most businesses are started with under $10,000 unless they need to purchase or lease a large building or expensive equipment. If you need start-up or expansion capital for a for-profit business read our articles on small business loans and venture capital.

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