Books, infomercials, and the internet have led people to believe the federal government gives away “free money” for all kinds of small enterprises and even for paying-off personal debts. None of the advertisements, hypes, and come-ons tells flat-out lies; none of them set-off the Truth-O-Meter at five alarms, and no one raises desperate calls for truth-in-advertising. However, many of the promotional materials hold-back critical details…unless you actually buy the book, download the software, or call the toll free number.
The truth about federal grants for small businesses is just slippery and vague enough that clever marketers and bob and weave easily through the gaps. If you ask whether you actually can obtain a federal grant to launch your own small business, the answer decidedly, unequivocally, and non-negotiably is “maybe.”
The government does not award huge numbers of grants to individuals, because most individuals do not have the capacity to deliver the large-scale public works and public interest projects and products for which the government awards grants and contracts. Major retail businesses cannot apply for grants, for example, unless they meet an annual sales requirement, and they very carefully must document their compliance.
Nevertheless, the Small Business Administration does award planning and “capacity-building” grants to individuals and small partnerships. It similarly awards grants for training and job re-training, all of which increase employment and therefore reduce individuals’ debts.
Just as importantly, however, the federal government does support small businesses with tax incentives and guaranteed loans. In effect, individuals can get nearly free money from the government by working with SBA officials and small local banks to develop and implement effective plans for growing and expanding their businesses.
Early in 2010, President Obama recommended $30 billion go to small banks as capital for loans to small businesses. Because small businesses produce nearly 70% of new jobs in the United States, stimulating home-town enterprises has far more beneficial effect on the overall economy than granting massive bail-outs to a few struggling corporations. A $50,000 capital improvement loan to a small business easily can increase its capacity by 100%, enabling the owners to double their workforce. Doubling their workforce, the small business owners help individuals reduce their indebtedness and secure their homes.
Will the federal government help your small business? Ironically, just as the banner ads and infomercials suggest, you should hire a consultant to find out exactly what the government can do for you and your employees.