How to get free money to start a business
Most entrepreneurs or would-be entrepreneurs have seen all kinds of ads or television commercials promising free money to start their businesses. These ads even feature people who claim to have gotten grants or tens of thousands of dollars free from the government after buying a "how-to" book.
However, most often, these types of offers that claim everyone is entitled to free government money are nothing more than scams, one that many experts and business consultants refer to as urban myths that won't go away. According to the small business association, Congress has not set aside any type of monies for the purpose of starting or funding small businesses. There are, however, very restrictive grants that are rewarded to people to research new technologies for the government, but they are mostly limited to people who are experts in the fields of engineering or physics - the average person who wants to start, say, a catering business, would not have access to these types of funds.
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The US Small Business Administration does offer grant programs, but they are not for those who are looking to expand or start a business. Rather, they are designed to expand or improve organizations whose purposes are to provide small businesses with management, technical, and financial help. Typically, the type of organization that receives these grants are non-profits or government programs.
That said, there is very little in the way of "free money" available to start a business. The SBA, however, does have money available for loans to start or expand businesses - around $16 billion worth. But this is not "free" money; these are loans that must be paid back. Most of the testimonials from people who claim to have gotten free money are actually people who have gotten these types of small business loans.
So how can I get money to start a business?
While there may not be much by way of free money, there are still plenty of options for funding your business, including:
Venture Capitalists
Venture capital is a type of private funding provided by investors that help to finance struggling or new businesses. A venture capitalist is one who makes these types of investments. This is not free money either; the venture capitalist or venture capital firm makes a return on their investment by way of a percentage of the profits. This type of funding is difficult to obtain, however, as venture capitalists are very selective in whom they choose to fund; about one in 400 businesses who seek venture capital are actually granted it. Venture capitalists are interested in companies that have very high growth potential and have sources to back up the claims.
Small Business Loans
The United States Small Business Administration offers loans to start-up companies, but they don't just hand it out. The SBA takes a variety of factors into account, including the business's credit history, collateral, business profile, cash flow projections, and other pertinent information. Businesses who want to receive loans can not just walk into a bank and apply for a loan. They will need to put together a portfolio that details the company's history and financial state, as well as that of the business owner or partners.
While free money is not readily available to the average person starting a business, there are still plenty of options for funding a business.
