Free Money?

When most people think of grants, they think of money given for free to nonprofit organizations. But for-profit companies, and frequently startups, can also win grant money.

Locating the right grant is a little like looking for your soul mate. The grant is out there, but you're going to have to do a lot of looking to find a good match. A good place to start is at your local bookstore. There are a lot of books about getting grants, with titles like Grant Writing for Dummies (John Wiley & Sons) by Beverly A. Browning, Grantseeker's Toolkit (John Wiley & Sons) by Cheryl Carter New and James Aaron Quick, and Demystifying Grant Seeking (John Wiley & Sons) by Larissa Golden Brown and Martin John Brown. And then there's the bible of grant books-the annual Grants Register (Palgrave Macmillan), which lists more than 3,500 grants.

There are other places to look, of course. The most logical place to get an infusion of cash is from Uncle Sam, but you can also win grants from foundations and even some corporations.

Content Continues Below

Even in the most economically challenged of times, the government is one of the best sources for grants. For instance, the National Institute of Standards and Technology's Advance Technology Program offers grants to co-fund "high-risk, high-payoff projects" that will benefit American industry. Whatever the project is, you can bet it will be scrutinized by a board of qualified experts and academics to the nth degree.

The Small Business Innovation Research (SBIR) Program, which is coordinated by the SBA, gives grants to small businesses looking for funding for high-risk technologies. The catch: Unlike the Advance Technology Program, the technology must meet the R&D needs of the federal government. Founded in 1982, the SBIR Program recently awarded $1.5 billion to startups, with grants going to software, biotechnology, healthcare and defense companies. So if you're planning on opening a pizzeria, you might have trouble with this one.

However, there are federal grants awarded to food and nutrition companies. For example, a pizzeria that caters to children and specializes in serving nutritious, healthy pizzas may be able to win a grant. You can also check with your state or local government-start with your local or state chamber of commerce.

Finding the grant is the easy part; the hard part is getting the grant. You have to jump through the hoops of each organization, which usually involves writing an extensive essay or plan explaining why you need their money. There are grant-writing businesses out there as well as grant brokers-people who try to find the right grant for you. You pay them regardless of whether they find you a grant; on the other hand, if they land you a $750,000 grant, you still pay them the flat fee-generally from $15 to $100 an hour, depending on their level of success.

But if you don't have the funds to hire a grant writer or broker-and if you're a decent writer and have a passion for your business-then start researching, and fill out the forms and compose the essay yourself. After all, there's no rule that says you can't try to get a grant on your own.

Excerpted from the revised and updated third edition of Start Your Own Business: The Only Start-Up Book You'll Ever Need(Entrepreneur Press), by Rieva Lesonsky and the editors of Entrepreneur magazine.