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Educational Consumer Tips

Government Grants

Author: Better Business Bureau
Category: Finance

There is always a steady stream of business owners on the lookout for easy, low-cost sources of financing. Scam artists know this. That is why advertisements and offers for "free grants" can be particularly tempting. Better Business Bureaus report a recent surge in people who have been victimized by such promotions, and advise caution when responding to these offers. The promises are enticing to those looking to start a business or expand an existing operation. Sometimes business owners are targeted through print advertisements or e-mail spam that promise "Receive Free Small Business Grants to start virtually any type of business. Results Guaranteed!" The ads typically claim that "foundations can be a better source for finance than banks"; that "we've taken the guesswork out of free business grants" and "anyone can get an interest free cash grant."

Other times, telemarketers who claim to be able to "guarantee" qualification for cash grants contact business owners by phone. Interested applicants may be asked to send an application fee, ranging from $20 to more than $100. The grant advertiser promises that the business owner's financial needs and requirements will be matched with the most suitable private foundations. Or, they may promise to provide a list of available grants. These promises rarely, if ever, pan out. If the business owner does receive anything in return, the materials generally consist of a list of agencies and foundations to which they must write and request an application. Information on private foundation grants is available at no cost from any public library! Also, your regional or state economic development offices can direct you to legitimate foundation grant programs for which you might qualify. Generally, obtaining a grant is a complicated process, requiring documentation and research. The vast majority of grant-making foundations require that applicants for funds meet very specific guidelines established by the foundation and that the funds be used for specific projects supported by the foundation. Another twist on the "free grant" scam involves scam artists claiming to be affiliated with the government.

 Business victims in several states report receiving phone calls from "federal government" officials. Those called were advised that they "qualified" to receive "free grant money" because they had paid their taxes on time, or had met unspecified criteria. Some victims stated that they had been asked to provide their checking account or bank routing number so that money could be deducted in order to receive the "free grant" immediately. The government does not contact people to offer them money! If anyone does happen to qualify for a government grant of some type, the government does not request payment for it. Business owners can research, for free, information on government grant programs at the U.S. government Web site,