Why Small Business Grants Are the Best Way to Fund a Business

by James Crawford

Each year, thousands of government agencies and local organizations hand out billions of dollars in small business grants. Grants come in all shapes and sizes, and are distributed for any number of reasons. There are small business grants for technology, hiring new workers, and even grants for established family businesses. The list goes on and on – if you own a business, thousands of available grant opportunities could fit your business.

Why Small Business Grants Are the Best Way to Fund a Business

Here are some of the reasons why grants are a great way to fund a business:

1. Tax-free capital — Unlike retained earnings, grant payments are tax-free cash that can be used to build upon an existing business. Tax-free capital is the best kind of capital, since a profitable business will pay anywhere from 10-35% of its earnings in taxes — money that can’t be spent on expanding a business.

2. Grants provide networking potential — The best part about grant opportunities is that a grant is usually awarded to several different people and businesses. In accepting a grant, you will have the opportunity to meet other successful business owners who might have an interest in working with your business. As most business owners understand, half the difficulty in running a business is building connections to other business owners and powerful people in the community.

3. No repayment — Grants are free money, period. No capital disbursed through an available grant opportunity has to be repaid. So what you receive from a grant is money that you don’t have to worry about paying back. Many businesses fail because of the stress of debt capital – money raised through bank borrowing that requires frequent monthly payments to service the debt load. Debt tends to be most difficult for smaller businesses that are not yet established, as well as established businesses which have irregular cash flows. Irregularity of income is especially concerning when your expenses are regular, and servicing debt is a burden that will cost your business month after month, year after year.

4. Grants allow for expansion — Sure, some grants will allow you to invest in growing your existing business, but grants can also be used to extend your business into new markets. A printing company, for example, might find a grant which would allow it to hire a graphic designer. In doing so, the company can move into a new market – graphic design – while maintaining its existing business in the printing industry. Think about how you could use capital in your business to make a new product or service that complements an existing business that you have right now.

There is no better way to fund a new or existing business than with a small business grant. Remember that grants are tax-free money that never, ever has to be repaid. And grants are anything but limited – you can find grants for any kind of business in any size.

Start searching for a business grant by reaching out to local business development organizations! Between incubators, free resources like SCORE (http://www.score.org/), online directories, and government agencies like the Small Business Administration (http://www.sba.gov/), there is no shortage of ways to discover free and available funding for your business right now.