We’ve all seen the headlines: “Millions in free government money for your business.” Late-night infomercials and Internet advertisements promise business grants and loans to start or expand a business. Sound too good to be true? It is.

Facts About Government Business Grants and Loans

The federal government does not provide business grants and loans for starting and expanding a business. Government business grants and loans are funded by your tax dollars and therefore require very stringent compliance and reporting measures to ensure the money is well spent.  As you can imagine, grants are not given away indiscriminately.

Business Grants and loans from the federal government are only available to non-commercial organizations, such as non-profits and educational institutions in areas such as, medicine, education, scientific research and technology development. The federal government also provides business grants and loans to state and local governments to assist them with economic development.

Business Grants and Loans Available Through State and Loacal Programs

Some business grants and loans are available through state and local programs, non-profit organizations and other groups. For example, some states provide business grants and loans for expanding child care centers; creating energy efficient technology; and developing marketing campaigns for tourism. These business grants and loans are not necessarily free money, and usually require the recipient to match funds or combine the grant with other forms of financing. The amount of the grant money available varies with each business and each grantor.

If you are not one of these specialized business, both federal and state government agencies provide financial assistance programs that helps small business owners obtain low-interest loans and venture capital financing from commercial lenders.

Hope this information can be useful for explaining about Business Grants and Loans.

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