Small Business Start Up Grants from Government and Private Funding

There are plenty of misconceptions about government grants for business start up. There are sites that promise millions of grants to be given to individuals to help them find relief from debt. That is not true. Grants for business start ups are to be used for business start ups only – not for relief from debt, education or student expenses, medical aid, and other purposes.

Contrary to popular belief, individuals actually have a less chance of obtaining a grant than a company. Of course, that does not mean that an individual can’t obtain a grant. When searching for a grant, it is important to check what the available grant is for. Many grants are specifically given only to companies and organizations but not to individuals.

Business Start Up Grants from Private Funding

Specifically available for use in starting up a business, these startup grants can provide many types of support.

  • A direct grant is provided for use in staff training, capital investment projects, export development, and similar activities. Often, before the grant is given, the company must put up around 50% counterpart of the total cost.
  • In equity financing, the provider gives the business a sum of money. The provider is then entitled to an equity share in the enterprise.
  • A repayable loan is simply what its name implies. The company is granted a certain amount which should be paid from future revenues. However, if the company fails, the debt is usually written off.
  • A soft loan is so-called because its terms are “softer” than usual loans. Thus, this loan could come in the form of very low interest rates or no interest rates at all. Also, repayment terms are usually longer than usual loans.

Small Business Start Up Grants

  • Small businesses can avail of startup grants as long as the company meets the standard of the U.S. Small Business Administration.
  • For a business to be considered small, it has to fall under these categories:
    • 100 employees for wholesale trade industries
    • 500 employees for mining and manufacturing industries
    • $0.75 million for agricultural industries
    • $6 million for retail and service industries
    • $12 million for special trade contractors
    • $28.5 million for general and heavy construction industries

Government Business Start Up Grants

  • These grants are provided by the government; thus, rules and requirements are all determined by the government. These grants may have special rates or could be granted entirely for free.

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