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What You Need to Know: Government Grants and Loans

Question: How can I get the government grants to start my business?

Although many advertisers would like you to believe otherwise, the government does not award grants to start businesses. Most grants are awarded to non-profit agencies. Very seldom are they awarded to fund for-profit enterprises like a small business.

The grants that are available for small companies tend to be very specifically focused on very unique purposes, such as providing childcare or working with disadvantaged children. Grants of that type may not be used for general business operating purposes or to cover start-up costs.

Who gets the grants?

If you want to apply for one of those grants, you must realize that the application has to be specifically responsive to the needs of the granting agency. No one cares that you need money to start a restaurant or photo studio. These are businesses that are started every day without the assistance of grants. You can't just do what you think is a good idea; you must do what the granting agency thinks is a good idea. This requires research into the granting agency to understand its needs and requirements.

Even then, grants are highly competitive. It is not unusual for granting agencies to receive 10 to 100 or more applications for every grant available. The successful applicant is likely to be networked with the right people including political entities, non-profit organizations and agency professionals.

Programs that can help

The Small Business Innovation Research (SBIR) program does make grants to high-technology companies to conduct individualized research that will benefit the agency. A grant proposal is necessary, and the program is highly competitive. Only a few companies may actually qualify for this type of assistance.Go to for information on SBIR and STTR grants. This site gives information about how to begin the application and proposal process.

One other option is to check your state, regional and local governmental agencies to see if there are any grants available for your specific location and purpose.

Prospective or existing business owners sometimes purchase books and directories supposedly listing grant programs for entrepreneurs. For $50 or $75, business owners are promised a comprehensive list of sources for 'free money.' Business development counselors often have to spend a great deal of time convincing folks that the claims are untrue.

Business Loans

The reality is that the majority of capital available to the small business sector comes through loans. Some of those can be negotiated at a reasonable rate, and some require a guarantee. But 'free money' for small businesses is virtually non-existent.

A Small Business Development Center (SBDC) can offer you technical assistance, counseling and other educational resources. They can help you prepare to access capital through other avenues. You will need to prepare a business plan and demonstrate that you have a good understanding of finances and the other factors affecting your company.

There are many conventional business loans available as well as special loan programs through the U. S. Small Business Administration. The business development counselors available through Small Business Development Centers can assist in preparing applications and other documentation to apply for those loans.


For more information on legitimate financial assistance for small business, you can find the SBDC nearest you by entering your zipcode on the home page to “locate closest resources” or by visiting

(Article adapted from one authored by the Missouri Small Business Development Centers)