What is a business grant? Why might a business grant be the right choice for you?
According to the Chamber of Commerce, around 400,000 small businesses open every year in the United States. While 80% of them survive the first year, about 50% can hardly reach the five-year mark.
There are many reasons why a business fails. Including competition, lack of foot traffic, and mismanagement. When it comes to kick-starting a new business venture, originality and traffic are not enough.
An innovative idea is nothing without the proper funds. Financial support is needed for survival, but also for maintenance and expansion.
Finding The Money For Your Startup Business
Most entrepreneurs are not trust fund babies with money to spare. So, where do they get their funding from? Lots of small business owners apply for business loans. Loans consist of borrowed capital, which creates a debt that is paid back with interest across an agreed period of time.
While business loan options are plentiful, the process can be complicated. The wait is often long, and a low credit score can result in an application denial. Those who are lucky enough to receive the loan are also at risk. Variable interest rates fluctuate, making every loan payment increasingly pricier. If the business is unable to pay back the loan, the borrower can be personally responsible for the debt, risking their personal property.
Business Grants 101
As an entrepreneur venturing into a new business, you might be looking for funds. At that point it is important to understand what is a business grant. Are you afraid of falling into the loan debt spiral? Do you just not want the pressure of loan repayments when you are still figuring things out?
A small business grant might be the right choice for you. While they are more competitive and less abundant than loans, grants can offer great benefits at little to no cost. What do they consist of? A business grant is a free sum of money that offers the financial assistance every venture needs to grow. Yes, you read that right. For free.
The objective of the award is to eliminate the need for debt, allowing the business to grow and flourish. While giving entrepreneurs more flexibility and time to do what is right for the business, rather than being forced to make rash decisions just to bring a dollar in, at the potential cost of the brand and early users.
There are two main business grants divisions: governmental and private. As the name suggests, governmental grants are supplied by the American government. A percentage of the governmental budget is set apart every fiscal year for business grants. This sum is distributed at federal, state, and local levels. Every level, accordingly, has a different degree of competition and budget amount. These grants can be awarded by different federal grant-making agencies depending on the project.
The 26 grant-makers include the U.S. Small Business Administration, the National Endowment of the Arts (NEA), the Department of States, and the National Aeronautics and Space Administration. Every detailed listing can be found on Grants.gov.
Private grants are awarded by private organizations, like corporations, nonprofits, and private banks, as well as schools. They all vary in amount and can be received through competitions, applications, and portfolio or business plan submissions. For example, FedEx annually hosts a Small Business Grant Contest. The National Association of the Self-Employed (NASE) awards a monthly grant of $4,000 to one of its members. Many private grant-makers include their awards in catalogs like the Foundation Directory Online or the Council on Foundations website.
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