A Comprehensive Guide On Government Grants for Small Business
The thought of free money may sound lucrative, but qualifying for these grants may be an uphill task. It is, therefore, necessary to understand what these grants are and who is eligible for the much coveted government support. In the quest to help businesses, the government offers a sum freely that businesses don’t have to repay.
This money may be free, but it is rarely available for small businesses. Grants are aimed to support businesses whose sole mandate is to support specific public purpose. It is never an entitlement or meant to benefit all kinds of businesses.
Who qualifies for government grants?
The Australian government may be committed to supporting small businesses to help increase the GDP and tax base, but government grants are for specific industries whose principal purposes have been identified by the government for example conservation efforts, scientific and medical research. These grants are also awarded to government organizations at the local and state level, academia, and nonprofit organizations. Private and public educational centers are also eligible for this kind of aid, and so are the research institutions and independent school systems.
It may be difficult for individuals to qualify for government grants but it is not impossible. Your chances increase if your business is targeted to benefit the general public or if the services you provide fill a void, then you may be eligible for government support. Another group that has a better chance of getting grants is nonprofit making organizations designed to assist government activities. Grants are also meant to support research and development for technology-based products and services for the government.
What happens if you don’t qualify for government grants?
The process of applying for business grants may be complicated and requires expertise and significant time. These grants also require the commitment to adhere to certain obligations failure to which you may be legally penalized. The arrangement enables the government to get returns on its investment. The complicated process and requirements make it difficult for small businesses to apply for these government grants but these ventures can still receive funding from the small business administration (SBA) to help grow and expand their businesses.
The money offered by SBA is not a grant, but it is a source of capital that will enable businesses to start up and grow, recover from a business disaster and export their commodities. SBA does not provide the loans. It only offers a guarantee to the bank or lender that it will pay off a portion of the loan should the business owner default on loan repayment. So when you are applying for SBA loans, you are applying for a commercial loan through an authorized SBA lender or bank with an SBA guarantee.
Benefits of government grants
The beauty of government grants is that they don’t need any form of security and the reward is much greater. Receiving millions of dollars with a single proposal is possible. Government grants increase your credibility. They increase your goodwill and make it easy for you to receive funding from other financial institutions.
Limitations of grants
Government grants may be free money, but they are not easy money. Getting these grants is tough, and there are a set of regulations on who is eligible or not. This eligibility requirement is meant to lock out other organizations. The application process is tedious and requires tons of hard work and research. There is also a set of regulation on how to spend this money to make sure there is no fraud and misuse. It also ensures that the government gets a return on its investment. The grants are competitive, and there is a lot of bureaucracy that may make it difficult for a business that requires immediate aid to wait.
If you are a small business looking for funding, government grants may not be your best bet. It may be difficult to get them but not impossible altogether. Consider going for commercial lenders who are friendly to small businesses and who offer attractive interest rates. If you feel you can get grants, do a thorough research and don’t go for firms who promise to write for you winning proposals. There is never a guarantee that you will get government grants. Ultimately, the decision on whether to apply for government grants for small business or apply for SBA loans is yours.
We can help you understand whether you qualify for a government business grant. Call us today for more information.