Free money for your business can be obtained through government grants. These funds can come from different sources, including federal, state, and regional government agencies. There are general business grants as well as grants specifically targeted at minority businesses, women’s businesses, and green businesses. The best part is that these funds do not have to be repaid.
Grants are lump sums of money that do not have to be repaid
Grants are free money awarded to your business, and unlike loans, you do not have to pay them back. You can apply for grants from local, state and federal governments as well as private corporations. Getting free money to start your business is an attractive proposition for many business owners.
However, applying for these funds can take time and patience. Depending on the type of grant you are applying for, the process can take days or longer. Generally, you will need to provide some personal information and business information to fill out an application. Some grant applications may also require additional materials such as a business plan or financial statements.
Depending on the type of grant, you may not have to pay taxes on the funds. However, grants for veterans are often non-taxable. If you are awarded a grant for your business, you should consult a tax advisor and accountant to determine whether the funds are taxable. If you don’t want to pay taxes on the money you receive, consider putting the funds aside. If your grant is taxable, you will need to include the money in your quarterly estimated taxes.
Some grants are designed to help minority business owners. For example, the Women of Color Business Grant is a program aimed at helping women of color start a business, secure capital and contracts, and increase employment opportunities. Other grants require qualifying business experience, such as running a for-profit company or operating in a certain industry.
They do not have to be repaid
While free money for your business may seem attractive, you need to realize that grants have their own drawbacks. While business grants don’t require repayment, they still require you to have a tradeline and credit report with the major commercial credit reporting bureaus. As such, these funds won’t help you build your business’s credit history.