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Government grants and loans for your small business

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If you are starting up a small business, one of the first things you will need to secure is funding. There are many different avenues for funding your business, from small business loans to grants.

Government grants

Most people have seen all kinds of ads or television commercials promising government money to start their small or home businesses. These ads even feature people who claim to have gotten grants or tens of thousands of dollars free from the government after buying a "how-to" book.


However, most often, these types of offers that claim everyone is entitled to free government money are nothing more than scams, one that many experts and business consultants refer to as urban myths that won't go away. According to the Small Business Association, Congress has not set aside any type of monies for the purpose of starting or funding small businesses. There are, however, very restrictive grants that are rewarded to people to research new technologies for the government, but they are mostly limited to people who are experts in the fields of engineering or physics - the average person who wants to start, say, a catering business, would not have access to these types of funds.

The US Small Business Administration does offer grant programs, but they are not for those who are looking to expand or start a small home business. Rather, they are designed to expand or improve organizations whose purposes are to provide small businesses with management, technical, and financial help. Typically, the type of organization that receives these grants are non-profits or government programs.

Government loans
That said, there is very little in the way of "free money" available to start a business. The SBA, however, does have money available for loans to start or expand businesses - around $16 billion worth. But this is not free money; these are loans that must be paid back. Most of the testimonials from people who claim to have gotten free money are actually people who have gotten these types of small business loans.

The United States Small Business Administration offers loans to start-up companies, but they don't just hand it out. The SBA takes a variety of factors into account, including the business's credit history, collateral, business profile, cash flow projections, and other pertinent information.

Obtaining government grants and loans
If you are interested in applying for a government grant or loan, the best place to start would be to do some research online for the different types. Make sure you qualify as well.

Once you have an idea of the type of loan you want to secure, your best bet would be to visit the United States Small Business Administration and find out what steps you need to prepare yourself and your company for obtaining a loan. Keep in mind that a business that wants to receive a loan cannot just walk into any bank and apply for a loan. They will need to put together a portfolio that details the company's history and financial state, as well as that of the business owner or partners.

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Posted by DK
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