Starting a small business from scratch is difficult at the best of times and raising startup capital is perhaps the hardest part. Your bank will probably want personal guarantees if they even consider you for a loan. Your savings and even your home may be at risk if your business fails, so the thought of a free government grant to start your business is very tempting. But do these grants really exist and can the average entrepreneur get one?

There are indeed many grant and loan programs for small businesses, including many that are administered by state or local government, rather than the federal government. Unfortunately, the whole procedure for finding and applying for a grant can be time-consuming and complex. Some grant eligibility decisions can take a while to wade through the bureaucratic processes. You will have to submit business plans and grant proposals that will take a considerable amount of time to create. Time which could be better spent on building your business.

Having pointed to the drawbacks, there are many genuine government grants for both small businesses and individuals available, and these can be substantial. The government gives away $400 billion, yes billion, in grants. Twenty-six Federal agencies annually offer over 1,000 grant programs in various categories. It will generally be a lot easier to find government help for businesses in deprived or rural areas, or for minority businesses. Typically, consultancy or training packages are more freely available than cold hard cash.