“How can I get grant money to start a for-profit business?”
This is the number one funding-related question that Small Business Administration, other government agencies, and financial institutions encounter from potential entrepreneurs seeking money to start a business.
The infomercials on late-night television selling books or offering free seminars appear to be very convincing. I have spent hours investigating myths and facts about grants. Here are the findings:
Myths about Grants for “For-Profit” Business:
As part of the research on grants, I attended a few different seminars that were held by privately owned organizations at some of the major hotels.
Most of these organizations rarely kept business brochures or their contact information on site. The speakers were professional. During the presentation, they showed statistics and slides and did a great job of convincing the audience that their organization can help obtain grants to help people start a business, or even to buy a house. They also said that their organization employs the best grant writers so as a member you will be assigned a professional grant writer who will help you obtain the untapped government money.
The presentations were always high energy. The most common sales pitch used by most of them was, “what you are paying for the membership package is a fraction of the cost compared to the amount of grant money you have access to, and its the grant money you keep and never required to pay back.” Depending on the organization conducting seminar, the package ranged from several hundreds to a few thousands of dollars, which during the sale was advertised as “special price for today only.” At the end of the presentation, many people would line up to purchase their package.
I have come across people who purchased similar membership packages, books, or monthly subscriptions, and went through the process of applying for a grant but never received any grant money. Instead, they lost their investment. Some even said that the firm they bought the membership package from no longer exists.
Facts about Grants:
Government grants are mainly for nonprofit businesses, education, energy efficiency-related ventures, community development, and similar categories. To learn more about grant categories and requirements for obtaining government grants, visit GRANTS.GOV. Also, learn who is eligible for a government grant.
I spoke with almost every government agency that is involved in lending money to small businesses. The only government agency that offers grants to “for-profit” small businesses is the United States Department of Agriculture Rural Development. The agency offers grants to businesses only in the in the rural area and it has very specific requirements. To learn more about USDA rural development small business grants here.
Sometimes the local state agency, city, and state website also lists local grant offerings but its mostly for non-profit businesses, community development, or similar.
Other grants for “for-profit” business that I have come across is when a community contributor, a private business, or an organization that is interested in growing it’s awareness or want to encourage a cause, offers money as a grant but there are specific requirements to obtain that grant money. The grant amount is usually in a few thousands of dollars and occasionally higher. This type of a grant is very rare.
The only real funding source for for-profit businesses is to obtain a business loan or to find an investor. Any organization that claims to be offering small or large grants for “for-profit” businesses then be sure to conduct adequate inquiries about its legitimacy.