In spite of what people see on television or hear from friends, the fact is there is no government agency or private foundation handing out free money to start small businesses, regardless of the money seeker’s gender, ethnicity, or economic status. Everyday our office gets calls from people convinced there’s “free money” out there to fund business start ups.
The fact is that most grants are awarded to non profit organizations. A few go to businesses that do research and development geared toward crucial government projects. These grants are extremely specific in nature and often quite technical.
For example, there is a tiny grain of truth in those late night TV infomercials. There is a program called “Small Business Innovative Research” which does award grants of up to $100,000 to research ideas that seem promising, and then to develop products if the research is successful. However, most of these grants are for projects such as how to put a satellite into orbit and then repair it. These funds are not available to people who are interested in opening restaurants, hair salons, and other more common small businesses.
If the government provided free money to everyone who wants to start a small business, it would not last long. And can you imagine the outcry from taxpayers if their money was funding these risky ventures?
There are a few instances that one can obtain “free money”. One program is called PASS that is administered by the Social Security Administration. If you are an officially designated disabled individual you may qualify for a small Grant.” Another source is Vocational Rehabilitation administered Division of Rehabilitation Services. It is a lengthy process. Here again one must be classified as disabled. There are separate handouts on both of these programs in our Library on this web site.
The fact is that most new businesses are started with personal savings, loans from friends or relatives, or small commercial or personal loans. Perhaps one reason this “free money” myth is so prevalent is that people are looking for an alternative to the work and detail required to get a conventional loan.
The idea of writing a business plan and approaching a lender can be intimidating. But think about it, are not you more likely to succeed if you do the groundwork and research required? There is a reason procedures are in place for small business loans. One of the most important factors in obtaining a loan for a new business is the borrower’s personal credit history. Lenders don’t care if you are male, female, black, white, Asian, Hispanic, young or old.
The bottom line is: Can you pay the money back?
The Greater Knoxville Chapter of SCORE provides training and counseling for individuals who want to start their own businesses, including finding the best source of funding to start your own business. If you need help return to HOME for review of the workshop schedule and/or registration for personal counseling with an experienced business mentor and advisor.