According to Bankruptcy Law, approximately half of all small businesses will fail within the first five years. For many of them, lack of funding and resources in a poor economy are contributing factors.
In fact, the United States Courts have released statistics for 2011 and state that last year alone, 49,895 businesses filed bankruptcy. While this number is down from 2009 and 2010, where business bankruptcies averaged about 58,000, it is still a significant number, especially if you are thinking of starting your own business.
Ensuring your business makes it through those first five years is vital. Taking advantage of available resources will get your business off the ground and help it stay afloat until it has grown to the point where it’s bringing in a profit.
You can do this with business grants, but first you’ll need to understand where to find them and know exactly how to apply for them.
Obtaining a Business Grant: A Step by Step Plan of Action
The first thing you should be aware of when searching for grants is the fact that the federal government does not provide grants for small businesses directly. That being said, there are grants that are funded by the government, as well as grants provided by various state governments.
If you are interested in a grant for your business, follow this step by step plan of action to locate, evaluate, and apply for business grants.
- Time and Resources – Finding the right business grants for your company takes time and a variety of resources. If you’ve already started your business, you may or may not have the extra time. One major mistake business owners make is Make sure that locating and applying for a grant won’t take time away from your business, when you should be marketing and selling your products. You may need to hire a consultant to assist you in locating and applying for the right grants if too much time will be taken away from your business or you may need to reevaluate your timeline and priorities to determine whether you really need the grant immediately or if it can wait six months or a year.
- Locate Business Grants – After you have determined you have the time and resources necessary for locating business grants, you need to where to locate them so you can apply. One of the best sources for business grants is the Catalog of Federal Domestic Assistance, or CFDA. This website provides a list of thousands of grants at no cost, many of which are geared toward minority business owners. Every state in the U.S. contains an agency that gives out grants for business. While the names of these agencies vary depending on the state, they are most often called the Economic Development Agency or the Department of Commerce. Contact the agency in your state for business grants. The Economic Development Directory is another great source for business grants, providing a directory of 2,000 consults, development agencies, and associations offering grants for businesses.
- Eligibility – After you have found one or two grants you are interested in applying to, you need to make sure you eligible for those grants. Eligibility varies, depending on the grant, but is usually based on sales revenue, your location, the number of years your company has been running, your race, your sex, or your specific purpose for the funding.
- Funding – When applying for a grant, pay special attention to the range and average funding offered. After all, you will need this funding to start or expand your business. While some grants will have a fixed amount they provide, others will offer a wider range of financial assistance. In order to obtain the most funding possible, make sure you are completely honest and accurate on the information on your application, create a well-prepared business plan that will show how you will spend the money, and consult an outside expert to add credibility to your application.
- Keep in Touch – Don’t bug the grant office, but make sure to keep in touch with them in a professional manner to see how the application process is proceeding.
Finding and applying for business grants can help you avoid becoming one of the 50% of small businesses that fail within their first five years and keep you out of bankruptcy court.
Locate the funding you need today to start or expand your business.