Government Small Business Grant Vs. Small Business Loan

Starting a small business can be very costly, as any entrepreneur knows

. That's why many people start looking for financing options. There are several choices, but if you want to remain in control of your business, you can rule out investors, which leaves you with government small business grants and small business loans. These are two very different options, so we'll take a closer look at them here.

Loans

Loans are borrowed money. You'll need to pay it back, plus interest. Often the money is provided by a bank, but there are other options, as well, including government loans and private lenders.

Many people go for this option because they don't know any better and either don't feel they can get a government grant or don't believe they exist. Loans can put a lot of pressure on a small business because they charge interest rates that can be fairly high in some cases. The pressure to hurry up and make enough to pay back the loan can distress a business owner and may end up causing the business to go downhill. Many new companies fail in their first year and the need to repay a loan certainly doesn't help.

Government Grants

Grants are different from loans in that you don't need to pay them back. That means it is essentially "free" money, though you won't find anyone just handing it out. There is a rigorous process of application and approval that needs to be carefully followed. However, a government small business grant could be a lifesaver for a small business that is able to set up properly with enough money for marketing and equipment.

There are literally hundreds of government grants available to you and even more funding options are available through private corporations and other sources. If you are searching online for these without help, you'll likely only find a handful that apply to you.

A searchable list of available government grants is the first step in finding minority grants that you can apply for. There are quite a few lists online, but most of them are not complete. It is usually worth paying a small fee to gain access to the best listings which will let you search hundreds of government grants.

Finding government grants for business isn't that difficult if you have a good, comprehensive list. The difficult part lies in creating a proposal that will catch people's attention and give them a good reason to choose you as the recipient for the money. Your best bet is to apply for more than one grant, preferably very specific ones and then write a killer application with all the details necessarily.

Government small business grant applications require a great deal of information, including timelines, project and budget descriptions, justifications for the money and an outline of how you will track spending and progress once you have received the grant, among other things.

While a loan might seem more familiar, government grants provide you with the opportunity to really get ahead in a new business. You'll be starting out with no debt and yet, sufficient cash to launch in style and give your company the publicity it requires to be successful.

by: Jamie Hanson

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