Home Companies Tips for Obtaining Government Grant Money For Small Businesses

Tips for Obtaining Government Grant Money For Small Businesses

by gbaf mag

If you are looking for a small business start up loan, there are several options available. Private funding is usually offered by banks, credit unions, or other lenders. Small business owners can also apply to the Small Business Administration for a loan. Typically banks are the best source for private small business start up loans. Here are several common options that banks offer.

Owner Start Up Loans. Owner start up loans are generally based upon the owner’s personal credit history, income, and the company’s assets. Typically small businesses are self-owned, partnerships, or sole owners with fewer employees and/or lesser annual revenue than a large corporation. Banks typically have higher qualifications for these loans than other financing sources.

Small Business Loan. The Small Business Administration offers loans to small businesses employing five or more employees. Qualification requirements include net revenue, history of success, credit history, and local tax records.

Firm Size and Employees. Searching through the SBA’s database provides information on selected characteristics of the organization. These characteristics include firm size, number of full-time employees, number of contractual employees, and total contract dollars available. When determining eligibility for a loan, the lender uses this combination of factors to evaluate its risk.

Sole Proprietorship. The Small Business Administration offers loans for small firms that are not owned and operated by the borrower. A sole proprietorship is different from a corporation in many ways including taxes, credit history, and initial investment. When considering a small business loan, the lender will evaluate both the business’s assets and its liabilities. It will consider the borrower’s ability to make required payments and whether it has sufficient financial resources to sustain operations over time.

Number of Employees. Lenders categorize small businesses as small businesses employing five or fewer workers. To qualify for a loan, these firms must have a maximum of five employees. Lenders also consider the percentage of employees employed on the premises when determining eligibility for a line of credit. Eligible companies are those with the best financial and management practices.

Industry Publications. The Small Business Administration does not typically fund research or studies related to small businesses. If funding is required, it will most likely come from federal agencies such as the U.S. Small Business Administration and the National Science Foundation. To find grants based on industry publications, conduct a search on SBA’s website.

Selection of Small Businesses. To successfully apply for a grant, a small business must demonstrate the eligibility to use selected characteristics. These characteristics are based on the type of the business, industry, geographic location, and projected needs. To help qualify, provide the SBA with information about the selected characteristics that they assess as part of the small business application. Examples include the following information: the percentage of employees who are women, the highest gross annual income for the company, the highest percentage of employees who are disabled, the largest number of local customers, the highest percentage of sales for the last three years, and the largest number of total employees. A lender may require additional information on the business owners’ business plans, employee compensation plans, and financial projections.

Researching Specific Industries. One of the challenges for small businesses in obtaining funding is to determine whether their industry will be served by the grant funds. As most grant funds are targeted at small businesses in specific industries, it is best to explore the industry you are focusing on so you can find opportunities for your company.

Selecting Employees. While many small businesses choose to go with just one employee, the truth is that many small businesses have between one and five employees. In this situation, determining the employee count can be a daunting task. One of the ways you can address this issue is to determine the skills needed by your employees. Many employees are skilled in a particular skill set, but not all employees are skilled in all skills. You can use your budgeting resources to identify the skills needed by your employees so you can target grants accordingly.

Self-Employment. Self-Employment refers to the individual or family who own their own business. In the early years of self-employment, many small businesses had an owner rather than employees. If you are interested in establishing self-employment, there are specific grants available for this purpose. For more information on these grants, contact your local small business development agency.

You may also like