Government Grants for Businesses - Watch Out for Scams!

Have you received a phone call from someone claiming to have a "federal" grant for you and saying you are "pre-approved" for a government grant? They will tell you that all you have to do is pay the "pre-payment" fee? Don't believe them. Here's the real deal:

Those Phone Calls. They're a scam. The government (which government?) does not contact people to tell them they are eligible for a grant. This scam has been out there about 4 years, according to snopes.com.

Do It Yourself. You don't need to pay someone to find grants for your business. You can find them online yourself, with just a little searching:

• Federal Grants are listed in the Catalog of Federal Domestic Assistance (CFDA). Here is a listing of small business grant programs.
  
• State Grants information is available by going to Business.gov and fill out the information on the search listing. The results page will include a link to grants available in your state.

Types of Grants. Small business grants from either the federal or state government are very limited. They typically are of two types:

• Grants to assist certain types of people: women, minorities, disabled, veterans. If you don't fit into one of these categories, you aren't going to qualify.
  
• Grants to further business development in certain areas: disaster areas, rural and tribal areas, and low-income development areas. For example, if you want to start a business in Cedar Rapids, Iowa, where we had all the flooding this past summer, you can probably get grant assistance. Or if you want to start a business in an area that has been designated as a re-development area, you are likely to get grant money. Otherwise, you probably won't.

Most small business grants are indirect. They are for non-profit groups helping small businesses, not for businesses themselves. For example a listing from the CFDA for Women's Business Ownership Assistance was to fund groups that help women in business. The grant did not provide money for actual individual women in business.

Grants Come and Go. A book you purchase today may include listings for grants that were in effect two years ago; some of those grants may have lost funding or have been closed to new applicants. Even online listings may be out-of-date.

The grant process is long and complicated. It is also very competitive, with lots of people applying. Even if you are able to find a grant that you are eligible to apply for, the process is difficult, and you don't know if, at the end of the application, you will get the money.

Bottom line: If you can meet the criteria I listed above, it might be worth your time to check on grants available in your state. Otherwise, don't waste your time. If someone tells you they can help you get government grants, either federal or state, tell them "thanks but no thanks" and do your own searching. Better yet, get busy on creating a business plan and go get your own money.