A business opportunity exists in terms of a gap in the market that needs to be filled. Identifying this gap requires keenness. After identifying the gap, putting up the necessary resources to start a business is the next important step. There are many ways of funding a business, whether a starting one or an existing business. A business can be financed by personal savings, contribution from family and friends, debt financing (small business loans), equity financing or through business grants. Before deciding the type of funding to apply when financing your business, it is important to understand each type clearly.
What Are Business Grants?
Business grants refer to financial aid given to the business by either the government or other private bodies. Unlike business loans, grants do not require repayment. Grants are monies that come without financial obligations, and are therefore the cheapest way to fund business projects.
There are different types of grants. The most common ones are:
1. Project support/ categorical grants: these are grants given to fund a specific project. They must be used to finance that project for which they were applied for. There are several types of categorical grants. They include seed money, endowment grants, planning grants and many more.
2. General purpose grants: are grants provided to the business to support general operations. This type of grants can be used in anyway provided it furthers the mission of the organization. Block grants fall in this category.
3. Earmark grants: these are grants available in the United States. They are appropriated accordingly by the congress.
What To Do When Applying For A Business Grant
Due to a high demand of grants, many businesses fail to qualify for this lucrative financial aid. However, with the correct details, you might just get a grant. The following are important when applying for a business grant:
1. First, understand what the fund provider requires. Do not be shy about going to the fund provider premises and making an enquiry.
2. Illustrate the importance of your project. Let the fund provider see that your project is meeting the needs of people. Explain why your project should be off the ground.
3. Provide an accurate budget for your project. Justify the amount you are requesting. Here, it is advisable to point out all items comprising your budget and attaching their cost before arriving at the total cost. Do not over-estimate your budget just to get more funds. Try your best to be realistic.
4. Show that you have your project well. As much as grants are not to be refunded, not fund provider would want to throw money into a poorly planned project. Outline the time frames and the deadlines.
5. Let your application be presentable. Use medium, easy to read fonts. Employ a good layout. If possible, use graphics.
It is also good to understand grants from a fund provider’s point of view. Understand what factors he or she will consider before giving out a grant.
Have a successful application.