Mary Paulsell, Assistant State Director of the Missouri Small Business Development Centers at the University of Missouri, hears this question at least twice a week.
“Do you have any grants to start a small business?”
Grants are usually made by government agencies or non-profit foundations. Very seldom are they intended to fund for-profit enterprises like a small business. The grants that are available for small companies tend to be focused on very specific purposes, such as providing childcare or working with disadvantaged children. Grants of that type may not be used for general business operating purposes.
“A great deal of misinformation exists in the marketplace regarding the availability of money to start companies or expand existing firms,” says Paulsell.
“The reality is that in spite of what the television infomercials claim, the majority of capital available to the small business sector comes through loans. Some of those can be negotiated at a reasonable rate, and some require a guarantee. But ‘free money’ for small businesses is virtually non-existent.”
The few grants available to small businesses from government agencies are specifically designed to help the agency meet its goals. For instance, the Small Business Innovation Research (SBIR) program does make grants to high-technology companies to conduct individualized research that will benefit the agency. A grant proposal is necessary, and the program is highly competitive. Only a few companies may actually qualify for this type of assistance.
“Unfortunately, there are some individuals and companies who take advantage of small business owners by selling them books and directories supposedly listing a myriad of grant programs for entrepreneurs,” Paulsell says. “For $30 or $40, business owners are promised a comprehensive list of sources for ‘free money.’ Our counselors often have to spend a great deal of time convincing folks that the claims are untrue.
“We can’t offer you free money, but we can offer you technical assistance, counseling and other educational resources without a fee. We can help you prepare to access capital through other avenues. You will need to prepare a business plan and demonstrate that you have a good understanding of finances and the other factors affecting your company. But we can work with you on that, and in the end, you will have a healthier business.”
There are many conventional business loans available as well as special loan programs through the U. S. Small Business Administration. SBDC counselors can assist in preparing applications and other documentation to apply for those loans.
For more information, contact your local SBDC or University Outreach and Extension office at 660-785-4307.
Don’t fall prey to the advertising that promises you something for virtually nothing. Save your money, and invest it wisely in your growing business!