Last Updated on Apr 8, 2020 by James W
Every successful business begins with a brilliant idea. But as any start-up company and entrepreneur will tell you, the real work comes after said idea is hatched. The critical link in the business success chain is funding, and that’s where most start-ups encounter their first major obstacle.
Those who have done their homework know that various options exist, including angel or venture capital investment, crowdfunding, bank loans, and even financial support from family members and relatives. Proper research will also reveal another excellent source of funding: government grants for small businesses.
Why Consider Government Grants
Let’s start with the obvious reason: grants come with no financial strings attached. When a fledgling company secures funding from banks or private investors, it will have to repay the amount plus interest rate. For a business that needs every penny to get off the ground, such an arrangement can be too burdensome and may ultimately bury the venture.
Government grants for small businesses are also a great option for certain groups of entrepreneurs. Companies started by women, veterans, or minority members can get preferential treatment in some programs. Moreover, there are grant projects launched specifically to help such entrepreneurs.
In addition, governments prioritize certain industries and start-ups operating in them often have greater opportunities for obtaining grants. Examples of such industries are technology, energy, and healthcare.
Things to Keep in Mind
For all of their attractions, government grants for small businesses are not exactly thick on the ground given the factors that come into play. For one thing, there are strict eligibility criteria business owners must meet. That’s because federal and state governments prioritize enterprises catering to specific public needs. Sometimes, restrictions are also placed on location, employee numbers, and revenues.
Another thing small business owners need to keep in mind is that grants come with stringent requirements on spending. If they get the money to purchase equipment or train employees, that’s exactly where it should go. Straying from the guidelines comes with the risk of having to repay the funds.
In many cases, it takes quite a while for business owners to actually get their hands on the money. The approval process can last anything from three months to a year, which many start-ups may find too long of a wait.
Then there’s the fact government grants are rarely large enough to keep new businesses going for a prolonged period of time. It might, therefore, be best to combine it with other sources of financing.
Where to Look for Small Business Grants
The internet is full of information on government grants but, as with all information floating online, it should be approached with caution. The safest way is to check federal and state authority websites, as well as those of government-related agencies.
Government grants are undoubtedly an excellent way for small businesses to take off and keep going. However, responsible business owners should do their research and ensure they have several avenues open for funding. This is the only way a new enterprise can be guaranteed steady access to capital, which is critical in the early days of any business venture.
image source: https://unsplash.com/photos/wgivdx9dBdQ