From the August 2004 issue of Entrepreneur

Q: In a past column, you wrote "Grants for starting a business are few and far between." However, plenty of resources tout that the government, by law, has to give approximately $350 billion in grants for a variety of purposes (think Matthew Lesko). So once and for all, I need to know whether there are actual U.S. grants or if this is just a ploy to sell a directory.

A: There are grants-monetary aid that a recipient does not have to repay-they are just few and far between. Here's what author and infomercial guru Matthew Lesko had to say when we put your question to him:

  • Grants are available, but from less than obvious places, such as state and local organizations and nonprofits. Finding them is the issue. Use GovEngine.com for state and local information; for nonprofit sources, try searching public libraries.
  • Even more valuable is a government contract. Lesko advises becoming savvy about how governments award contracts and leveraging this information.

We also asked Lesko to identify grant recipients. His staff supplied us with the names of five business owners who received grants. We talked with each of them and found that one, Jim Bell, had used Lesko's book Free Money to Change Your Life to start his business. He obtained a Vocational Educational Services for Individuals With Disabilities grant from the New York State Education Department.

Another of Lesko's examples led to the Amarillo Economic Development Corp., which, since 1996, has provided 24 grants to businesses. Two recipients were startups with no financial history, and five were less than 12 months old. Sales-tax revenue is the source of funding. Unfortunately, this appears to be the only program in the nation using public money this way.

As you can see, grants to start a business are limited to people in special circumstances or those lucky enough to live in a locale where funding is available from state or local sources.

What, then, are your best sources of funds? Many people keep their existing job and develop their business as a sideline. Some of the more daring among us take the very risky path of borrowing on credit cards or with a home equity loan. The problem is, you never know for sure how long it will take to get a business going to the point that it can support you. Experience suggests everything takes at least twice as long as we expect.


Authors and career coaches Paul and Sarah edwards have written 15 books, including Working From Homeand Finding Your Perfect Work. Send them your startup business questions at www.workingfromhome.com or in care of Entrepreneur.