Small Business Grants: Fact or Fiction
Written by Lynn Wilson
March 14, 2008
A couple weeks ago I received a call from my brother-in-law asking me to help him find and write a small
business grant. It’s a request we receive often at the Innovation Center. I proceeded
to tell him that small business grants are basically a myth. There is no government
agency waiting to hand out money for people to start excavating businesses,
restaurants, or any other type of for-profit businesses. I could sense his frustration
but couldn’t tell if he thought it was me or him that was misinformed. Unfortunately
this is the same frustration many of our clients feel when given this response.
We’ve all seen the infomercials with the guy in the funny suit begging us to buy his books that tell you
how you can obtain free money to start a business. In fact, there are many advertisers that want you to
believe there is a pool of money just waiting to be grabbed up by inspiring entrepreneurs. The truth is
most grants are awarded to non-profit organizations. Very seldom are they awarded to fund for-profit
enterprises like small businesses. The harsh reality is that most small businesses are started with
personal savings or loans from family, friends, or commercial loans. Even the SBA does not give grants
to start a small business.
I recently ran across an article about a woman who started a small business with grants funds. The
difference; what she actually started was a non-profit organization. Grants that are available in the
small business sense are those that address societal problems such as the one mentioned in the article.
Here is a link to the article http://www.successinstyle.org/familycircle.pdf .
There are some grants available to assist high-technology companies. For instance, the Small Business
Innovation Research (SBIR) program does award grants to companies for the research and development
of products that have the potential for commercialization. Even these grants are limited to cutting-edge
research that addresses critical scientific and engineering needs in fields ranging from agriculture to
manufacturing. To learn more about the SBIR program click on this link
http://grants.nih.gov/grants/funding/sbirsttr_programs.htm. If you feel that you qualify for this type of
grant assistance the Innovation Center will be happy to assist you with preparing the grant application.
In addition to specialized grants there are incentive programs available to some small businesses
through state and local city governments. Oklahoma for example has the Oklahoma Quality Jobs
Program that allows qualifying establishments creating new quality jobs to receive an incentive to locate
or expand in Oklahoma. Administered by the Oklahoma Department of Commerce, the program
provides quarterly cash payments of up to 5 percent of new taxable payroll directly to a qualifying
company, for up to ten years. To qualify, a company must be a central administrative office,
manufacturer, research and development or a listed service company with 75 percent of total sales to
out-of-state customers. To learn more about the Quality Jobs Program visit
http://www.okcommerce.gov and click on the Business Incentives link. Local cities may also provide
incentives to small businesses that locate in their respective communities or industrial parks. To learn if
your community provides such incentives contact your local economic development authority.
You can find information about grants at your local library and on the Internet for free. The federal
grants web site is www.grants.gov. Every funding source has eligibility requirements you must meet to
apply as well as activities you must perform in the event you do receive a grant. In addition to assisting
with SBIR grant applications, the Innovation Center has access to demographic and economic data that
may be useful when preparing a grant proposal.
The old cliché holds true; if it sounds too good to be true, it probably is. Don’t be scammed into buying
books or paying for services claiming to find and write small business grants for you. If you want to start
a small business you will most likely need to rely on traditional funding sources. Next month our feature
article will explain how to plan and prepare for financing your small business and help you identify
various sources of commercial funding.