Where's the Grant Money?

Q: I've looked into several different types of grants, foundations funds, etc., and I don't seem to fit the requirements for any of them. I don't need hundreds of thousands of dollars to get set up, so I keep running into dead-ends. I have spent several hundred dollars on books about grants and the like. I can't even seem to work with the SBA—I just don't have that "little" extra for a microloan. What do you suggest?

A: You're coming to grips with the fact that not only does it take money to make money, but too often it takes money to get money. But we have heard many stories of people who get started with $100 or less. How do they do it? Some take temp work to pay for at least their living expenses while they get underway. Others continue to work a full-time job but unlock an instant stream of cash by reducing the amount withheld for taxes in anticipation of the business loss they expect during their first year. (Do check with a tax professional before doing this, however.) But many others turn to people they know—often relatives or friends—and sometimes to people they do not know well. In other words, an angel.

A local angel may be a doctor or other professional you go to; doctors often invest in local companies. Check with your nearest Small Business Development Center or SBA office for help locating angels. Even with someone you know, be prepared to present a credible business plan, and expect to sign a formal loan or investment agreement.

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And you don't necessarily have to give up on the idea of getting a grant, either. While grants for start-up money are few and far between, there are a few worth checking out:

• Count Me In for Women's Economic Independence offers loans of $500 to $10,000, $5,000 for start-ups.
• The Amber Foundation awards monthly grants to women looking for seed money to start an online business. A $3,000 grant is awarded for first place, $1,500 for second and $500 for third. Grants are awarded based on "mini" business plans submitted for the competition.

Paul and Sarah Edwards' most recent book is Changing Directions Without Losing Your Way. Send them your start-up questions at www.workingfromhome.com or through us at Entrepreneur.