For many enterprising individuals thinking of starting a small business, but lacking the financial support, small business grants look, at first glance, as an attractive option. After all, it is free money and numerous granting authorities want small businesses to apply and make use of the funds – Just find the right grant, apply for it, take the money and start the business. Sounds easy, but sad to say, it is not so easy.
The core problem is finding a grant which matches your business. To put it in another way, find a grant whose eligibility requirements you can fulfill. Small business grants are generally made with very specific requirements with regards to the exact nature of the business, how the funds are to be used within a specific area of that business and other personal, geographical and financial requirements relevant to the business and its owner.
Once you decide you want a grant, you very quickly find that anywhere you go, you are directed to a handful of organizations within your state, or the state your business is located within. A client of mine in the health care industry once asked me to help him locate a grant for a startup in New Jersey. After 3 days of intense research and contacting various federal, state and private trusts which dole out grants to the health care sector, I realized three things:
• There are no federal grants.
• Whatever small business grants the state hands out are financed using federal funds allocated to the state for very specific and defined purposes, most of them related to infrastructure development, research and for offering services to underserved communities.
• Lastly, there are private trusts, again limited within state, who hand out grant funds with less rigidly defined usage rules, but these mostly have the requirement of being able to prove your financial commitment to the business in the form of matching the grant with your own funds.
Now, if you still think you can get hold of a grant for your small business, then you need to put yourself in one of the two categories above – Either your use of the funds has to match one of the grants available from your state government, or you need to add your own funds to the business, prepare financial statements and a project report and then contact all the private grant making trusts within your state. There is no third way. If you seriously want to spend some time and effort on getting hold of a grant, here’s what you need to do:
• Hire a grant consultant. There are plenty around who will do it for a small amount. They will help you locate the grants, arrange for you to fill up the requisite forms, write up a nice and professional grant request and help put you in touch with these grants.
• Hire a CFA or financial consultant who will prepare the financial papers and project report. Trust me, there’s no way you can do this by yourself.
Once you have everything ready, contact the grant organizations personally and try to build a cordial relationship with the grant officer. Remember, there’s no such thing as a free lunch. If they are giving you a grant, they expect you to fulfill certain obligations, whether it is in terms of the financial progress of your business, or fulfilling certain social, or charitable giving conditions. If you take a grant, fulfill the terms. If you don’t, you will never get a grant again.