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Message on Grants
You
may have heard that there is free money out there to be given away to
small business owners. This is not necessarily true—most small
business owners obtain financing through loans and their own personal
funds.
The
difference between a grant and a loan:
A
grant is essentially “free money” that does not have to be paid
back. A loan is “borrowed” money that will need to be repaid, often
with interest. The government’s grant program is very limited and
described more below. The government’s loan program is through the
Small Business Administration (SBA). SBA loans are guarantee loans made
through local lenders. For more information on SBA loans see our other
publications.
While
grants provide money that does not have to be repaid, they often require
the recipient to provide matching funds. For example, you may need to
come up with $10, 000 before the grantor will give an additional $10,
000.
Are
there any grants out there for your business?
Grants
all have different requirements for eligibility. However, the majority
of grants are given by community foundations
to groups of people who are looking for money to support a good cause.
Examples may be:
The
Small Business Innovative Research Program is the
federal government’s grant program. It focuses on research and development for
the commercial sector. For more information contact the Industrial
Research Liaison Program through Indiana University at 855-6294.
Most
grants do not fund the usual retail, service, or manufacturing business
idea. This is not to say that there is not something out there that will
fit your needs. However, it is the responsibility of the business owner
to do the research.
The
Business Plan:
For
any grant or loan, you will need to write a business
plan or proposal. Any lender or grantor will want to know the
reasons why they should give or lend you money. The Small Business
Development Center has free counseling services to give guidance in
writing a business plan.
Reprinted
with permission from David Miller.
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