No Such Thing as Free Money? Will your wish for free money be granted? Don't count on it.
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Q: In a pastcolumn, you wrote "Grants for starting a business are fewand far between." However, plenty of resources tout that thegovernment, by law, has to give approximately $350 billion ingrants for a variety of purposes (think Matthew Lesko). So once andfor all, I need to know whether there are actual U.S. grants or ifthis is just a ploy to sell a directory.
A: There are grants-monetary aidthat a recipient does not have to repay-they are just few and farbetween. Here's what author and infomercial guru Matthew Leskohad to say when we put your question to him:
- Grants are available, but from less than obvious places, suchas state and local organizations and nonprofits. Finding them isthe issue. Use GovEngine.com for state and local information; fornonprofit sources, try searching public libraries.
- Even more valuable is a government contract. Lesko advisesbecoming savvy about how governments award contracts and leveragingthis information.
We also asked Lesko to identify grant recipients. His staffsupplied us with the names of five business owners who receivedgrants. 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 hisbusiness. He obtained a Vocational Educational Services forIndividuals With Disabilities grant from the New York StateEducation Department.
Another of Lesko's examples led to the Amarillo EconomicDevelopment Corp., which, since 1996, has provided 24 grants tobusinesses. Two recipients were startups with no financial history,and five were less than 12 months old. Sales-tax revenue is thesource of funding. Unfortunately, this appears to be the onlyprogram in the nation using public money this way.
As you can see, grants to start a business are limited to peoplein special circumstances or those lucky enough to live in a localewhere funding is available from state or local sources.
What, then, are your best sources of funds? Many people keeptheir existing job and develop their business as a sideline. Someof the more daring among us take the very risky path of borrowingon credit cards or with a home equity loan. The problem is, younever know for sure how long it will take to get a business goingto the point that it can support you. Experience suggestseverything takes at least twice as long as we expect.
Authors and career coaches Paul and Sarah edwards havewritten 15 books, including Working From Homeand Finding Your Perfect Work. Send them yourstartup business questions at www.workingfromhome.com or in care ofEntrepreneur.
