The Truth About Government Loans Or Grants

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Many government ventures support small business by offering loans and grants. Startups that are looking to access capital can turn to government for assistance in the form of loans or grants. But are all businesses eligible for a loan or grant from the government? The answer is no. The state offers loans only to those who are in the nation building business. Sometimes technical assistance is also provided to start-up businessmen to show them the right path to growth.

What are small business grants?
In simple terms, small business grants are funds that are provided to start or expand a qualifying SME. These grants need not be paid back, but in most cases require some financial investment from the applicant. That is why it is appropriately called non-repayable contributions. These contributions are not easy to come. The grants come from the federal government, and most of them come with large number of loans and grant programs. The reason for the difficulty in procuring a grant or loan is because of the stringent requirements that require demographic eligibility and certain standards of business.

Federal government does not offer grant to start businesses, cover business cost or paying off debts though there are some special grants available, which come with certain criteria. Businesses relating to medical or scientific development or environmental conservation are eligible for grants or loans.

Federal SBIR Program and R&D Grants
The federal grants are offered under the Small Business Innovation Research (SBIR) program. These grants are provided to those companies that are looking to fund their R&D efforts to develop innovative technology products. Federal grants are provided on a competitive basis as hundreds of companies are waiting to take advantage of these. For this reason, the grant procedure itself could be time-consuming and pricey.

State Government Grants
Just like the Federal SBIR grants, the state government grants are also available that are offered by government agencies called the discretionary incentive grants. It is left to the discretion of the state agencies to decide whether the business can stimulate the economy of the region such as alternative energy development. These state government grants are often targeted at large business, and mostly small businesses hardly stand a chance to compete with them.

Tips for finding grants
The SBA loans and grants search tool is the right way to start your search to finding a grant or business loan. To begin your search, do not specify any industry in the search criteria list, this can help you get the complete list of grants and other financing opportunities the state has to offer. All you have to do is to select the state and leave the industry criteria blank.

Each state offer loads of business loans, grants and tax credit programs that can benefit small and medium enterprises. Relevant knowledge of the eligibility criteria, the application process can help you secure grants easily. Remember that this is not free money offered by the government to run your business. The process is not only demanding but expensive too.

Read also A Guide To Choosing A Reliable Bank For Business Loans

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