March 23, 2011
If you need a final injection of funds to get started, government assistance could help
Getting money from the state or federal governments to start up your business could be easier than you think.
The major federal government departments jointly provide about $3.5 billion in grants each year. On top of that the states also cough up an array of grants, for those savvy enough to apply.
Recipients of grants aren’t required to relinquish control of their businesses to be eligible. In most cases, they are also not required to guarantee a return on the initial investment.
Many of the grants available offer 50 per cent of the cash required to get your business off the ground, with business owners providing the other half of the equity.
There are, however, several hoops business owners need to jump through to secure funding.
Ben Cusack, a grant consultant, says applicants generally need to have funds in the bank to cover 50 per cent of the set-up costs of their proposed business.
Importantly, they also need to prove they don’t have enough money to establish the business on their own.
”It can be difficult for start-ups to secure a grant,” Cusack says. ”It’s often a matter of sorting through the maze of grants that are up for grabs.”
The initial paperwork requirements can be demanding. Applicants need to succinctly articulate their business plan. Cusack says the crucial difference between success and failure can come down to whether the application is poorly written or well-drafted. Another downside is that involvement in a grant scheme requires regular reporting to the grant provider about the state of the business.
Finally, you need to be prepared for your grant to suddenly dry up. A change of government or of policy and the scheme you’re involved in could be discontinued.
Cusack, who is also the founder of the independent website Bulletpoint, aggregates available grants on the site and notifies subscribers.
The site also provides case studies of companies who successfully landed grants and details of how much they received.
Cusack says if writing business plans is not your strong point, there are also grants available to pay for one, potentially saving you thousands of dollars.