How to Start a Startup with a Government Grant


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Starting a start-up? Almost all new entrepreneurs have the same problem – funding to get their business started. Whilst it is easy to start an internet only company you are still going to need some funds for stock and advertising. A brick-based company requires even more funding. In new companies that require premises, machinery, stock and staff the start-up funding can be quite considerable. Not to mention that you still have to eat and pay your bills whilst the new business is gaining sales momentum. It is no surprise then that an entrepreneur’s thoughts turn to grants. The free seed money – or is it?

Using grants to raise money puts you into a very competitive environment. Potentially many agencies and private companies offer grants. Unfortunately, first you have to find them. Then you will need to compete against the tens or even hundreds of other worthy applicants. So be prepared to compete.

The first hurdle you need to navigate is that of eligibility. All grants have some kind of eligibility requirements and these usually reflect the entity supplying the grant. So, you will find requirements pertaining to the applicant’s age, sex, location, race and level of disability. You may also find some restrictions upon the type of business and amount of funding available. You might also find some of the eligibility criteria very detailed and difficult to comply with. All of the requirements and questions within the grant request will be challenging to answer. This is how the granting establishments keep down the amount of applicants and ensure that the grants go to their required types of entrepreneurs.

Grant application

Next you will need to show that your business has a strong foundation, you have thought through its structure and it has a very strong potential for success. This is why many granters request a strong business plan to accompany the application. They may even interview you and question you about your business and its strategy and future plans.

Before you start looking for government money, ensure that you have your future business fully planned out. Decide upon your business model, your financial and marketing strategies and when you think that your business will start to make a profit. You should also have your products and services well defined and priced to sell in your chosen market. In fact grants are even harder than business loans to obtain. So treat your application like an extremely difficult business loan and you will not go too far wrong. Your grant proposal should be written and set out exactly as requested. It should contain all the information that has been requested in the required format. It should be compelling and portray your new business as viable and functionally strong.

So where do you find these grants? Well, a good search on the internet will find you quite a few. If you are going to buy one of the ebooks offered, ensure that it is up to date. Grant availability changes very quickly. Here are a few ideas to look for:

  • State: This should be your first place to look as these are the easiest grants to obtain. Often a state wants to encourage businesses to open up in certain areas and offers grants to entice companies to do this. So be flexible in your choice of start-up areas. Similarly, they may favor a certain type of business, so again, do your homework. You also need to ensure that your business plan and your grant application show that you meet these needs.
  • Federal: Most of government grants are for non-profit organizations but there are a few with-profit grants available so look keenly.
  • Local Government Departments: This is where you will find start-up grants for would be entrepreneurs with special needs. Minorities and women as well as the disabled are recommended to start their search here. These grants will be for new and improving companies that benefit the community in some way.
  • Large Companies and Charities: These organizations sometimes offer grants for new businesses that follow their particular belief. You will be expected to produce something worthy or useful with your new business.

Remember, to obtain a start-up grant, you need a strong business that is very likely to succeed, coupled with a clear purpose as to how the money will be spent. This will need to be supported with a strong business plan and an appropriate, credible application. So treat obtaining a grant funding just like any other difficult management task and you should be successful.

Read more about loans and grants from SBA.gov

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