Don’t be a victim of government grant, easy money scams. According to the SBA, “Nothing good in life comes easy, and that includes getting financing for your small business.”
Here’s an excellent SBA article that every small business owner should read – courtesy of the Fox Valley Chapter of SCORE.
“Despite advertisements to the contrary, no federal government agency — including the Small Business Administration — offers grants to start or expand small businesses. Most foundations, corporations and private institutions that sponsor grant programs follow the same policy, except in cases where the business involves development of a new technology, or is a nonprofit organization.
“The SBA does administer several loan programs in partnership with local lenders, community development organizations, and micro-lending institutions (agencies that specialize in limited, short-term financing). SBA backs those loans with a guaranty against non-payment that eliminates some of the partner’s risk. In other words, your application for an SBA-backed loan is actually an application for a commercial loan structured according to the SBA’s requirements.
“SBA loan programs include the basic 7(a) program; “504” loans, which are delivered through Certified Development Companies (CDCs) for acquiring real estate, machinery, or equipment as part of an expansion or modernization; 7(m) Micro-loans of up to $35,000; and post-disaster recovery and assistance loans. Complete details on these programs and their application requirements are available under the Services section of the SBA.
“Depending on where you live, your small business may be eligible for assistance from state and local economic development agencies. Most often, the assistance takes the form of workspace, training, and administrative support for start-ups; reduced rates on existing office or production space; and tax incentives. Others sponsor micro-loan programs for specific business types such as childcare and firms that locate in or support designated enterprise zones.
“Established small businesses can apply for federal grants to carry out various publicly mandated services or programs. As with the SBA loan program, they must be operated for profit, have a place of business in the U.S., significantly contribute to the economy, and meet size standards for its industry. For example, wholesale trade industries are limited to 100 employees, while most retail and services industries can have average annual receipts of no more than $6.5 million. More information is available at grants.gov, a central storehouse of information on over 1,000 grant programs from 26 federal agencies.
“For more assistance with creating a financing strategy for your new or growing small business, contact SCORE, Counselors to America’s Small Business.