A business grant is a topic of considerable fascination for many small businesspersons. They have heard of the 'free money' available to start a small business. What is the reality behind governemnt small business grants?
This page comes under the section Small Business Funding.
You can approach an authentic source of information, such as your nearest government small business support organization, to check about your eligibility for any business grant. Business grants are typically restricted to specific categories of beneficiaries.
Not all small business startups can get business grants. However, if you are starting your small business in an underdeveloped or distressed region, you might be eligible for some grant. Special grants might be announced for economic development of underdeveloped regions. Ad hoc grants might be available for regions that had suffered from a serious natural disaster like a cyclone.
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Sometimes, grants are available to weaker sections of a society, such as minorities, women entrepreneurs and members of underdeveloped communities. Your best source of information about such individual grants is your nearest small business support office.
Another category of businesses typically eligible for business grants are organizations that help small businesses to succeed. These organizations might provide training and guidance, or set up business clusters, or offer mentoring support to new enterprises till they are established.
Business clusters are a group of distinct small businesses that share common facilities, such as tool rooms or a marketing organization. By sharing such common facilities, each business can reduce the financial burden involved, and afford to set up higher quality facilities.
Business incubators are for novices who have no experience of running a business. An experienced group or person nurtures these businesses under a business incubator set up. Once a small business has gained adequate experience, it moves out and other novice businesses come in.
By supporting business skill development centers, business clusters and business incubators, public money can go much further, compared to supporting an individual startup.
Even if you or your organization is eligible for a small business grant, a typical condition would be that the grant should be supplemented with your own contribution. Often the amount of grant must be matched by an equal amount of your own money.
Another typical condition is that the grant money (and your matching contribution) should be used only for the specified purposes, such as acquisition of specific equipment. To ensure that this condition is adhered to, the grant-giving authority might have powers to inspect your records to check how the money was spent. If the inspection reveals diversion of the funds, you might be asked to refund the grant amount, together with interest.
Considering all these constraints, grants are really not 'free money' that you can use any way you want.
If you find that you are not eligible for a grant after checking with an authentic source, it is better to focus on other sources of funds, like a business loan. If you persist looking for an elusive grant, you might simply waste your time, and lose the money you could have made by focusing on starting your business.
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Are you writing a grant application for the first time? Maybe you’re a veteran fundraiser looking to sharpen your grant writing skills. No matter how experienced you are at writing requests for money, people and organizations are not going to support you just because you’re in need.
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