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How to get a small business grant

Discussion in 'Financing Your Business' started by djbaxter, Aug 26, 2017.

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  1. djbaxter

    djbaxter Administrator Moderator Member

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    GoDaddy offers advice on how and where to get a grant for your small business, and what to do after you get one.

    How to get a small business grant
    by Ty Kiisel, The Garage - GoDaddy
    August 24, 2017

    Read more...
     
    Edvin likes this.
  2. normasbathandbody

    normasbathandbody Member

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    Very Helpful Information.
     
    djbaxter likes this.
  3. chibiri

    chibiri Member

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    Is there a hidden fee in this? Like there is with loans? For example, the banks say they can give money but when i went to spruce everything up with the sba, they laughed their heads off, saying, "you're COMPLETELY broke? A $30k loan is going to cost you $3k. Get a job." they were very unhelpful.
     
  4. chibiri

    chibiri Member

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    Also, do i need to hire a grant-writer? The site is so confusing. Im guessing theres no easy application and i need to basically prostrate myself in black and white.
     
  5. Small to Feds

    Small to Feds MVP Member

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    My experience in the U.S. with small business grants, associated grant proposals and similar efforts over the last decade as a counselor to small business has surfaced some very hard facts of life.

    Start-ups, entrepreneurs and new small businesses regularly seek information regarding small business grants. There are many misconceptions about the nature of such instruments, who qualifies for them and what constitutes a small business grant. The misunderstanding stems from advertising on the Internet and other media creating the impression that grants are readily available and that they are "Free Money".

    There is no such thing as “Free” small business government grant money. In many instances individuals seeking grants should be looking to direct government contracting.

    DEFINITIONS

    Small Business Government Grants

    Small Business government grants are a type of contract and involve performance of a statement of work for agencies that are in some socio-economic endeavor serving the public, such as health care, public information, communications, high technology, or similar undertakings. A small business entity receiving a grant from a government agency or a private company becomes an extension of the agency or company mission and obtains funding to enhance that mission while growing as an enterprise.

    Small Business Direct Contract

    Small business direct government contracting differs from grants in sheer numbers and regulatory control. Direct contracts are used by all agencies of the federal government to acquire supplies and services. Both for-profit and non-profit organizations compete in direct government contracting. A direct government contract has a very specific work scope, schedule, deliverable items, pricing and in many instances incremental funding. A grant has a more generic functional orientation to funding and may or may not include deliverable items.

    There are some programs, such as Mentor/Protege and Small Business Innovative Research (SBIR) that appear to be hybrids of grants and direct government contracting and are often mistaken for grant instruments. They are not grants and are governed under the Federal Acquisition Regulation (FAR) as direct government contracts.

    REGISTRATION
    Guidance on registering to become eligible for both small business grants and direct contracts is at the following link:

    SMALL BUSINESS FEDERAL GOVERNMENT CONTRACTING ("Smalltofeds"): REGISTERING YOUR SMALL BUSINESS FOR FEDERAL GOVERNMENT CONTRACTING

    STRUCTURE AND STRATEGIC PLANNING

    Non-Profit Organizations

    Most small business government grants go to non-profit organizations because of the nature of the work such entities do.

    A non-profit organization operates in much the same way that a for-profit company does except that the founder (s) work for a board of directors that pays them a salary and, upon registration with state and federal governments under IRS provision 501 3 (c) or a similar designation, the business pays no taxes.

    What would normally be considered profit in a for-profit company is re-invested back into a non-profit to further its work. Annual reports are required by the IRS to demonstrate the re-investment and maintain a tax-free status.

    Non-profit organizations are usually initiated to pursue a religious or socio-economic endeavor serving the public, such as churches, health care, public information, communications, high technology, or similar undertakings.

    No one owns a non-profit organization. A board of directors, a charter, articles of organization filed with the state and the IRS designation with the federal government establish it as a public entity. In the event it is discontinued, all proceeds and assets are distributed by the government for public use and no one individual benefits. A non-profit charter must include that provision.

    The following link at NOLO provides the chronological process between a state registration and the IRS in applying for non-profit registration and tax-exempt status:

    How to Form a Nonprofit Corporation: A 50 State Guide

    For-Profit Organizations

    A for-profit organization is founded by individuals specifically defined by name as owners in the articles of incorporation with the state and registered with the federal government for tax purposes. There are many different types of for-profit entities (S Corp, Sole Proprietorship, LLC, Partnership, etc.); each type has its own unique tax and operating characteristics.

    A for-profit organization exists for the specific purpose of providing a return on investment for the owners. All assets on the books of the company are the property of the company, and although certain types of corporations, such as a Limited Liability Company (LLC) reduce the risk and insulate the owners' private assets to some degree, in general what is invested by an owner in the firm is the property of the firm and subject to business risks and the laws governing such matters. In return the owner or stockholder is entitled to the return on his or her investment as an individual in the form of dividends, direct proceeds after costs or other forms of entitlement (conveying what is commonly known as profit).

    GRANTS VS. DIRECT CONTRACTING

    Small Business Grant Funding

    Small Business Government Grants have the effect of supplying lump sum funding to a non-profit organization for a specific period once the grant is awarded. In general the funding is used to further the stated mission of the business. However, the grant provider may reserve the right to receive reports on how the money was spent and may require deliverable items associated with performance of the work under the grant.

    Certain grants take the form of cooperative agreements, whereby the non-profit and the agency commit to supplying mutual funding amounts to a project. Under limited or special circumstances involving 0 profit, a for-profit entity may be eligible for such a cooperative agreement with the federal government.

    Web sites for researching federal grants as well as additional information on grants in general are at the following sites:

    Home | GRANTS.GOV

    http://www.proposalwriter.com/grants.html#Grant Resources

    Small Business Direct Contract Funding

    Federal Government direct contracting regulations are at:
    Federal Acquisition Regulation (FAR) | Acquisition.GOV

    “Small to Feds”, the web site you are reading, was initiated to assist small businesses in understanding the above regulation and direct federal government contracting. Please see the table of contents in the left margin of this site for topics.

    As stated in the introduction above, both for-profit and non-profit entities compete for direct federal contracting. A non-profit entity will bid grants and direct contracts at 0 profit. The following links are suggested as an introduction to direct federal government contracting:

    SMALL BUSINESS FEDERAL GOVERNMENT CONTRACTING ("Smalltofeds"): INTRODUCING FEDERAL GOVERNMENT CONTRACTING INTO YOUR COMMERCIAL SMALL BUSINESS

    SMALL BUSINESS FEDERAL GOVERNMENT CONTRACTING ("Smalltofeds"): FEDERAL GOVERNMENT CONTRACTING SMALL BUSINESS SET ASIDE DESIGNATIONS

    SMALL BUSINESS FEDERAL GOVERNMENT CONTRACTING ("Smalltofeds"): SHOULD YOU CONSIDER SMALL BUSINESS FEDERAL GOVERNMENT CONTRACTING?

    SUMMARY
    This article has provided a brief (and admittedly general) overview of the difference between non-profit and for-profit business entities and the small business government grants and direct contracting available to each.

    Both small business government grants and direct government contracts are highly competitive. Selecting potential agency sources and submitting winning proposals are acquired skills. For assistance in writing grant and direct contract proposals please see the following links:

    SMALL BUSINESS FEDERAL GOVERNMENT CONTRACTING ("Smalltofeds"): FEDERAL GOVERNMENT CONTRACT PROPOSAL PREPARATION

    Proposalwriter.com

    When considering forming an enterprise, please assess in your business plan the potential of both types of entities in direct contracting or grant competitions. Go to the SBA web site that guides you through the business planning process. I suggest you follow the site presentation and note the factors to consider:

    The U.S. Small Business Administration | SBA.gov

    The following site contains samples of business plans:

    http://www.bplans.com/sample_business_plans/all_plans.cfm

    Look for examples in the above of both for-profit and non-profit organizations at the above link.

    Ask yourself some strategic questions, such as what competition you envision and what your marketing plan will be. Addressing these questions may take some research and that is all part of the process of putting in place your plan. It is your road map for the future.
     
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  6. Edvin

    Edvin MVP Member Top Contributor

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    Thanks for sharing Ken.

    head spinning.gif
    Now I know how others feel when they read my posting :)

    My business plan does not rely on government grants/contracts; but, I've added a section for further exploration. This post serves as a great spring-board.

    I would also like to share that reliance on grants/contracts can be detrimental to a business. During my research with franchisers, I noticed and asked why there was a high closing rate with one particular franchise. I was informed that many franchise owners relied on external contracts; thus, were unable to sustain themselves when contracts expired or or not renewed due to budget cuts.
     
    Last edited: Jan 10, 2018
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