The Myth About Grants for Business
Can an individual find a grant to help start a business? The answer is “Yes, it is possible … however, the chances of a for-profit business receiving a grant is highly unlikely.”
Both individuals and businesses set up foundations to provide grants for specific purposes. Many of them offer grants to individuals for educational purposes in the form, for example, of scholarships, fellowships and funds for special studies or research. Many offer grants to non-profit organizations such as the Boys and Girls Clubs. However, not many foundations offer grants to individuals to start a for-profit business. Generally, taxation laws prohibit foundations from granting money to for-profit businesses.
When an individual finds a grant that assists his or her business, it is usually for a very specific purpose. The money cannot be used for general business operating purposes. Businesses working with special needs children, for example, might be able to find a grant to help cover some of the costs of buying special equipment for use with these children.
If you want to look for a foundation grant for any purpose, there are two good Web sites to visit: www.foundations.org and www.fdncenter.org. Both of these sites list directories of foundations and how to apply for a grant.
Does the government offer grants to businesses? Maybe. Again, any grant from a government entity will be for specific purposes that usually involve research. The federal government as a whole does not offer grants.
Various agencies offer grants for business activities that fit with their missions. The Web site to investigate is www.sba.gov/SBIR. This site offers much information about various agencies that give grants and about grants that have been awarded in the past. The SBIR—Small Business Innovation Research—grants are very specific. For example, the Department of Defense awards grants to high-tech companies that will do specific research which benefits the mission of that agency. A grant proposal is necessary. This site gives information about how to begin the application and proposal process. Each agency will have its own proposal process.
Should You Look for a Grant?
A grant sounds like “free money.” However, in most cases, the individual searching for grants has to put an enormous amount of work into finding a suitable match and writing the requisite proposal(s). Then if the grant is awarded, performing the work required and reporting on the use of the funds for the grant award require additional hard work.
Barbara Cunningham, CunninghamB@missouri.edu
Business Development Specialist
Clay County, Missouri
University of Missouri Extension