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Where can I find a government grant or free money?" is one of the most frequently asked start-up questions from shoestring entrepreneurs. The notion that there are millions of dollars in government grants available to start a business is false. Such grants must be approved by Congress and included as part of the annual federal budget signed by the president. Unfortunately, the U.S. government doesn't currently offer any direct grants of money for starting a small business.
There are grants available to small businesses through various federal agencies. However, these grants are typically awarded to existing businesses and are narrow in purpose, such as the Small Business Innovation Research program, which awards grants to established and qualified enterprises to develop new technologies. Berkeley Systems, creators of the After Dark Screen Saver, received an SBIR award to develop software that helped visually impaired people use Macintoshes. The homebased firm Network Technologies & Applications, in Wisconsin was awarded $70,000 to conduct a feasibility study by NASA's Jet Propulsion Laboratory in Pasadena, California.
You may have seen ads, infomercials and books that promise to help: "Rake in $1 million per year by getting free grants" or "Milk Uncle Sam's free business grant programs." Ignore them. It's unlikely that these Promised Land products will lead you to a start-up grant source. Instead, you'll probably receive information compiled from other directories such as the Catalog of Federal Domestic Assistance. You can search this directory online or at the library. You'll learn that the majority of available grant money is targeted at nonprofit organizations and government agencies to fund community revitalization, training and education, or research projects, and to individuals for scholarships and financial aid or to fund artistic activities or fellowships.
Your best bet is to check out cash awards, prize money or minigrants offered by a dwindling pool of organizations. Look for leads in Awards, Honors & Prizes (Gale Group). It lists more than 3,000 prizes, many of which carry cash awards. You may also qualify to win an award through trade or professional organizations or in your community. The American Small Businesses Association, for example, gave its members a chance to win $1,000 business grants for essays sharing their best business practices or ideas. The Intellectual Property Owners Association annually recognizes outstanding achievement by an inventor. First prize includes a $5,000 cash award.
You should also peruse various entrepreneurial magazines—some of them have their own contests and award programs that come with prizes. Pay attention to publication ads, electronic alerts and other mailings organizations use to announce such opportunities. Lastly, you can always try to finance your dream with a small-business loan.
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