Business Article - Government Grants
Many people claim that government grants are simply a way to get free money for such vague goals as starting a new business. In reality, a government grant is a form of funding which is targeted at a very specific goal and which requires oversight at every stage. A grant incurs responsibilities which the grantee much keep track of, and the government body which gives the grant will regularly check on the progress towards the goal and see that the money is being spent on what it is meant to be spent on.
So a government grant is not a get rich quick scheme. Most government grants are given to large organizations which have staff that are dedicated to the art of grant application writing. These organizations include universities / colleges, research organizations, and agencies from the city, state and federal levels of the government. These kinds of organizations are favored in the process of applying for grants, both because they have the necessary trained people and resources to carry out the tasks described in grant requirements, and because they have an ongoing dedication to public works which are funded either all or in part by grants. This isn't to say that there isn't money available from the government that can help you. If you are a member of an underprivileged minority or if you have a disability that is covered by a federal aid program, you may be able to get grant money from a program to help you go to school and further your education, to help you get a new job, to help you pay for equipment that you need to better be able to work, and so on. What is typically referred to as a government grant, however, is generally not something that is easy to profit from.
Let's say, however, that you have an organization which is dedicated to providing some kind of public service. Some of the things that the government gives out grants for include civil engineering projects such as street repairs, programs to conserve electricity or water (energy conservation), projects to help revitalize areas by doing things such as attracting new businesses, social service programs that help people to train for entering or re-entering the workforce, and so on. The function of a government grant will be to provide some assistance in defraying the costs of something which your organization would be doing anyway, but out of its own budget (or which your organization would like to do, but would be financially unable to without a grant).
The first step in obtaining a grant for a project that your organization is interested in is to check the Catalog of Federal Domestic Assistance. Every year, after the federal government decides upon a budget, the Catalog of Federal Domestic Assistance is updated with all the listings of grants that are becoming available. There are generally well over one thousand grant programs running during any given year. The listing for a grant program will contain contact information as well as a deadline for applications, and will describe the purpose of the grant as well as how much money has been allocated to the grant fund.
After identifying grant programs in the new federal budget that your organization would be interested in, the next step is to contact the government agency which is sponsoring the grant and get more detailed information on the specifics of how the project is to be carried out. You need to find out what the expectations are, what the standards are, and so on. You need to determine whether your organization is realistically capable of carrying out the task according to the standards and regulations which are provided in the grant task description. If your organization is up to the task, you should get the application materials for the grant from the agency and fill them out. Put in any pertinent information about your organization which demonstrates that you are capable of handling the project. Provide any necessary background on the people who will be in charge of managing the project (of course, the selection process for grants is something that you want to go over at every step with the managers who will be in charge of fulfilling the project once the money is awarded).
Once the application is in, you wait to see if it has been accepted. If your application is accepted, you receive the funds according to the schedule described in the rules of the grant program and you start using it to carry out the task. This isn't the end, though! The grant will have an auditing process, usually done on a year by year basis but sometimes more frequently, through which the agency sponsoring the grant will make sure that the grant money is being spent on the project which it is meant to be spent on and nothing else, and that any grant money which is not used on the project is returned to the fund. It is likely that your organization will receive only a portion of the fund. This may be only a portion of the total cost of carrying out the public service task to which you have been appointed. If the money from the grant is used for purposes which are not outlined in the rules of the grant description, there may be fines or jail time involved for whoever is responsible for the misallocation of funds. Grant money is only meant for specific tasks.
In some unusual cases, a for-profit business will be able to get a government grant. However, this is only in cases where the business will be using the grant money to assist them in a social cause such as working with the needy or disadvantaged. The kind of businesses that people start all the time using their own funds, such as restaurants, are not candidates for general government grants to get started. Other organizations, such as the Small Business Association, may be able to help with special loans, but grants are only for specific uses and aren't a way to reliably fund a new business.
If you are running a for-profit organization, the circumstances under which you apply for a grant may be that your company is trying to develop a positive public image in the community by helping local people. A grant in this case will help you pay for the cost of your initiative. Research the government granting agencies listed in the Catalog of Federal Domestic Assistance and find out which programs your company would be able to utilize for the project that you mean to undertake. The project must be well suited to the requirements of the grant description, and your company must clearly be capable of demonstrating its ability to carry out the task. Connections in the local government or within your industry which will allow your company to reliably overcome any problems that may appear in the course of the project are a big plus in determining whether or not you will be accepted. Even so, there is no guarantee that your company will be selected for the grant. For every grant that is advertised, ten to a hundred applicants or more can be expected to apply. Applying for grants is a way that you can try to defray the cost of doing something that your company would likely be doing anyway; in this case, it is a way that your company can save money on an activity of public service.
Make sure that your company has the staff available to keep track of what the funds from the grant are being used for, so that no money from the grant is used for purposes that were not described in the rules. Remember the ongoing responsibility that you have as the recipient of a grant to the grantor, and see that every expenditure is catalogued in a way that is clear and easy to follow.
In the absolute rarest of cases, grants may be awarded to for-profit companies for the purpose of helping them research a new technology. These kinds of grants are few and far between, but if you are lucky enough to obtain one of them, the technology which results from the research done using the grant can be used to derive profit for the company.
Usually, however, businesses are funded through the use of loans. Business loans with low interest rates and favorable repayment terms can be found at many banks across the country, and there are lots of other funding sources such as venture capital firms and angel investors, all of which are easier for the typical company to make use of than to find a grant that will provide for future development of company resources. If your company is involved in researching high technology, then it may be worth spending some time to see if a technology grant is available for you. Keep in mind what grants are meant for, and you will be able to apply for them with realistic expectations!