Viewer question: Can I Get a Government Grant for My Small Business?

Here’s a question I got yesterday: maybe it’s something you’ve wondered about as well…

Hi, I have a question. My name is Bonnie. My husband and I own a small business that we have put all of our savings into and now that the economy has gone south we are having a hard time. So I applied for a small business grant. I received a phone call 10/26/10 from a Mr. (redacted) from the web site (redacted) telling me we can apply for a fifty thousand dollar grant. If we give them $398.00 they will file the paper work and in 5 days we will know and it’s a money back guarantee. I would like to know if this is an upstanding web site. This is the second place to call me – the 1st one said I needed to give them twenty five hundred up front and three thousand at the end when we received the grant money and it sounded funny, so I declined the first call. Thank you for your time.

I get a lot of these types of questions: ones about the integrity of a specific business. Normally, they’re hard to answer, because other than the same techniques available to all – checking with the Better Business Bureau or sites like The Ripoff Report, there’s really no way for me to know whether a specific business or website is “upstanding.”

In this case, however, no problem. This website is BS. How do I know? Well, first, let’s have a look at some of what this site is promising to Bonnie and people like her: here’s a cut-and-paste.

Q: How much money is available?
A: The government gives out $400 billion in grants annually. You decide how much money you need, as long as it meets the government agencies criteria, the money is yours to keep and never has to be repaid! This money is non taxable & interest free. Individual grant amounts vary greatly, but are typically between $5,000 and $25,000. Please remember that other type of financial aid sometimes come in the form of low interest loans, loan’s collateral or guarantees which are not grants.
Q: Do I have to pay the money back?
A: Grant money is not a loan. Trying to get money through a conventional bank can be very time consuming and requires a lot of paperwork, only to find out you have been denied. These government agencies do not have to operate under the same stringent requirements that banks do.
Q: This sounds too good to be true…
A: The referral companies’ evaluating your file deal with the same government-backed institutions as George W. Bush did before he became President. In fact, he received $200,000,000 dollars to build his team a new baseball stadium, turning a $600,000 investment into $15,000,000.
Q: How does this work?
A: You submit a quick, two minute initial application over the web. Your information will be carefully reviewed by a government grants advisor from an independent company. Your grants advisor has access to a computerized database of over 1,499 different grants programs. If your advisor identifies one or more programs for you, he or she will call you to advise you and to let you know what the next steps are.
Q: Is there a fee involved?
A: The initial evaluation of your information is done without cost by an approved grants advisor. If your grants advisor finds one or more grants programs that match your profile, you will be contacted and explained the remaining steps. Your advisor will also explain the program fee that is due. It’s important to act quickly as many programs have changing criteria and expiration dates.
Q: Am I guaranteed to receive a grant?
A: No. This decision is made only by the government agency you are applying to. However, the grants specialist we will assign to work with you will maximize your chances by making sure you are applying correctly and to the right program. If for any reason you do not meet the qualifications for a particular program your grants specialist can help you find a different one to apply under.

Rather than subjecting you to a detailed list of the many things amiss in this drivel, I’ll let Uncle Sam himself deal the deathblow. Here’s a cut-and-paste from this page of Business.gov, which bills itself as the “official business link to the U.S. Government.”

Contrary to what you might see online or in the media, the federal government does not offer grants or “free money” to individuals to start a business, or cover personal expenses.

Moreover, it states:

If you received information stating you qualify for a “free grant,” it is probably a scam. Get information from the Federal Trade Commission (FTC) to help you learn to recognize and avoid grant scams. If you have been a victim of a grant scam, you can file a complaint with the FTC.

In short, there’s virtually no such thing as free money in the form of a government grant for a for-profit business. Anyone promising one in exchange for a fee is a liar and a thief.

I’ve said it in many posts before, but I’ll say it again: there’s a special place in hell reserved for people who steal money from those who can least afford to lose it. Your job is to prevent them from getting rich while they wait for their slot to open.