Typically, this is due in part to the fact that many business startups require extra capital. Because potential business owners may lack the funds needed for a startup, they seek other financing alternatives.
Information about Government Grants to Start a Business
Government business grants are awards of financial assistance from a federal agency. The government grant is not a loan; in most cases, you don't have to pay the funds back. Typically, government grants are not available for startup ventures with commercial purposes. Government grants are mainly for non-profit and educational agencies.
Although your commercial venture may not qualify for business grants, there may be other opportunities available for business startups through the Small Business Association. The SBA is on hand to assist entrepreneurs in starting a business, including, in many cases, helping you secure financing opportunities.
Because taxpayer dollars fund government grants, the award recipient selection process is often very stringent. For these reasons most start up ventures do not qualify. Government programs want to make certain that a business is working for the greater good; the grant agency must be able to verify your organization's income and expenditures, its mission statement and business plan.
Types of Government Financing Options for Business Startups
Entrepreneurs may find it difficult to locate resources from government grants to start a business. However, there are other financing options available to consider as a source to help with starting your business. Make sure you have all the necessary paperwork in order and understand the requirements of the assistance program. Take the time to research your choices to find which one will work for your business venture.
Business Loan Programs
- The Basic 7(a) loan is for start-up businesses and businesses wishing to expand. If your business has a need for short-term working capital or assistance establishing a business or acquisition you can fill out an application for the Basic 7(a) loan program.
- The Certified Development Company 504 loan program is a non-profit corporation that works with the SBA. The Certified Development Company provides funding to businesses for economic development. Though funds are restricted for starting capital, you can use a loan from this company to purchase land or equipment, or to make improvements to your business' location.
- The New Markets Venture Capital program promotes the economic development of low-income areas. Its purpose is to create job opportunities. Loans are available to businesses that exist primarily in low-income residential communities. To qualify, your business assets should be lower than $2 million.
- The Small Business Investment Company is a division of the Small Business Administration. The SBIC supplies equity capital and offer long-term loans. There are various types of business start-up investment opportunities. To qualify, you must be a small business as defined by the Small Business Size Regulations.
There may be even more grants available to assist you in starting a business. Local and state business agencies are good sources for government grants to start a business. The local SBA can assist you with locating other grant opportunities that are in line with your new business.
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