Frequently Asked Questions
Here are some of the common questions we get asked at the SBDC.
If you don't see your question, please go to the counseling page and make a request! If it's a question everyone seems to have we'll post it below.
In short, the bad news is, in the 12 years I've been with the SBDC, I have never found a legitimate grant for business.
The long answer is...
Anything you may have heard about cash grants for businesses is just myth and legend. I have followed up on leads for what seems like hundreds of possible grants. I have never found one. Everything I have seen is just misinformation or flat out lies and scams. It’s believable because common sense would make us think that there should be something to help someone like disabled veterans but, I haven’t found anything.
Recently, I talked to a guy who had been selected to receive a $40,000 grant and enclosed was a check for $4,000. All he had to do was wire the company a $3,850 grant processing fee via Western Union and they would send him the rest of his money. He could even use the money from the check they just sent him to do it with. I advised him not to. He did anyway. The check bounced and now the bank wants their $4,000 back. Of course, the "grantor" is gone and the address on the paper work is for Montessori Grammar School in Ogden, UT.
In the advertisements they usually say something like “Buy my book and I will tell you about federal grants available to help you start your business.” Well the fact of the matter is that the federal government (U.S. Small Business Administration) gives Utah State University a “grant” for half of my salary. USU pays everything else. I’m here to help you start a business through training and counseling. So, there you go! A federal grant that helps you start a business…by paying my salary to teach you how to write a business plan. They make it sound like free cash but it never is.
Occasionally, I will have someone come in who has spent $300-$500 on a packet of grant information with a 90-day money back guarantee. The institutions listed in the packet like The Kellogg’s or The Kaufman Foundations give grants to places like Utah Schools for the Blind but would reject a business start-up or expansion request. Since they only meet every 6 months or so, the victim can’t get turned down and get the rejection letters back to the scammer in 90-days so they lose their money.
There are some grants that don’t apply to 99% of the population and I hesitate to mention them because I don’t want to be guilty of spreading business grant rumors but, here they are in case you come across the names in your research. One is the Small Business Innovation and Research Grant or SBIR. The SBIR is a program the government uses to get private industry to research something for them. If they need a new laser guided bomb sight. They send out the proposal. If your business has a long standing track record of producing that kind of technology you send them a proposal in competition with thousands of other firms. If you win, they give you some money to do the research.
The other is a Value Added Producer Grant from the Department of Agriculture. If you produce an agriculture product (let's say berries) and you want to add value to it prior to selling it (let's say make jam) and you are willing to put up half the cost of the new venture in cash (say you have $100,000 sitting around you don’t know what to do with) and you are chosen out of a national competition of thousands of other farmers for just a few awards nationwide, then the department of agriculture will match the cash you put into the business expansion up to a certain point.
Which is the best bank to apply to for a business loan?
Why apply to just one bank? Apply to every bank you can think of, within reason. A long standing history with your current bank may give you an advantage but, my recommendation is to shop around. Find the best deal and then revisit the other loan officers that want to work with you and haggle over details.
Every time you borrow money from anybody, they weigh the risk against the reward (interest). A start-up has a lot of risk. If you buy an existing business you know that tomorrow you will have customers because they are already coming in. If you start a new business, you don't know for sure if you will have customer 1 tomorrow. That increased risk really tends to scare off investors.