Is There Really Free Money for Your Business?

 

In 2006, Time Magazine named TruTouch one of that year’s best inventions:

“Identifying drunk drivers could get a lot quicker and easier after a new infrared alcohol test developed by TruTouch Technologies is launched next year. The device detects alcohol levels by shining infrared light on the subject’s skin and analyzing how it reflects that light. The skin test takes 60 sec. to produce results vs. 20 min. for a Breathalyzer.”

TruTouch raised the money to create its invention, partially, by getting free government grant money.

In the first round, TruTouch tapped a Treasury Department grant for businesses that demonstrated the potential to develop “new therapies to treat chronic conditions or unmet medical needs, reducing long‐term health care costs in the United States.” In the round two, TruTouch received a $438,000 grant administered by the United States Army Medical Research and Materiel Command (USAMRMC).

The point is two-fold: There actually may be the concept of “free money” you may hear about sometimes on late night TV. And second . . .

It can be really, really tough to get.

Federal grant money is administered by each individual federal agency, and each has very specific needs and requirements. For example, The U.S. Department of Agriculture awards a grant of up to $100,000 to expand, or assist in the improvement and expansion of, domestic farmers markets, roadside stands, and community-supported agriculture programs.

Maybe a better description of these programs would be “contracts.” If you are looking to get a federal contract, we suggest you check out the Federal Government’s page.

For actual federal grants, the best place to go is the government’s Small Business Innovation Research (SBIR) and its Small Business Technology Transfer (STTR) programs. SBIR/STTR offers grants to technology companies that undertake scientific R&D projects that have a high likelihood of having commercial applications.

Obviously, this does not apply to most small businesses. Here are some other ideas/options:

State and local governments: State and local governments want to attract new business to their areas and as such have created a variety of incentive, economic, and loan programs and funds intended to do just that.

Example: Portland, Oregon wanted to attract more startups, so some of its residents created the Portland Seed Fund. Begun with a half-million dollars infusion from the general fund, the new entity was dubbed Bridge City Ventures. Bridge City Ventures then approached other stakeholders in the city and eventually created a seed startup fund worth over $2 million.

It might be worth checking to see if your area has similar programs. Lots of localaties have a vested interest in finding and developing viable small businesses, especially ones that can contribute to local economies and help create jobs. Consider targeting programs like that.

Business plan competitions: Along the same vein, many locales are lately creating business plan competitions, whereby companies pitch their idea in a “Shark Tank” like environment. The winner gets some seed money and in-kind contributions from local companies. This might be worth a Google search.

Partners/investors/angels: No, the money you receive from bringing in a partner or investor certainly is not “free,” except to the extent that it is not money that comes out of your own pocket. But you can bet that there will be plenty of strings attached.

And finally, let me strongly encourage you to check out the rest of the information about different funding options and what they mean for small businesses on the rest of the Access to Capital site.

Photo Credit: 401(K) 2012, Flickr

Comments

  1. joel harris says:

    I am looking for help to build my business, and also want to open more business. I want to find out where I can get loans, grants to do this, and how I can go about getting the money I need to buy other business. thanks

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