Every year, small businesses are awarded billions of dollars in form of government grants. Although most people know that grants exist, few clearly understand where to get them, how to qualify for them, or even how to apply for them. In connection to this, the following are a few facts that you need to understand to leverage on grants for small businesses.
Small Business Loans Versus Grants
Small business loans and grants are two completely different things. While a business loan may be easier to obtain in terms of the procedure and qualification procedures needed, it is never “free money”. The money has to be paid back with some interests. On the contrary, grants are awarded to small businesses with the knowledge that they don’t necessarily have to pay them back.
Grant-giving institutions in Canada seldom provide grants to individual entrepreneurs looking to start or expand their businesses. In fact, these institutions don’t even supply grants to individuals who are planning to start their own non-profits. Most institutions are interested in providing grants to specific types of organizations and groups. Although there are some grant–giving organizations that might consider grant requests from certain non-profits, they only do so if they are located in areas where the institutions have existing business presence. In other words, these institutions only offer grants to projects that are, or will be consistent with their goals and objectives. On the other hand, government grants are only available to educational institutions and non-profits whose major focus is scientific research, education, medicine, or technology development. Moreover, if you do qualify for government grants for small businesses, it is important to note that the proceeds must be consistent with the funding institution’s objectives.
Partial Cover for Business Costs
Unlike grants received by government bodies and institutions, project-based grants require applicants to provide alternative or counter funding. Additionally, grants for small businesses may only cover just a fraction of the project’s cost. In fact, it is very rare to get a grant that covers 100% of the total cost needed to start or expand a small business.
Contrary to what many people believe, “free money” in form of grants are available—real business grants exist. In fact, every year, hundreds of small businesses and other minority-owned businesses in Canada receive such grants from a wide range of government agencies and other non-profit organizations. While grants don’t have to be repaid, they have to be used to at least start a new business or expand an existing one—and based on the funding institution’s goals and objectives. Other types of grants must also be used for innovation research. If you would like to learn more, visit Ontario Centres of Excellence and check out their online resources.