Free Money to Pay Your Bills? Not Quite
Free Money to Pay Your Bills? Not Quite
You know the crazy guy on late night infomercials prancing around in his question mark suit screaming about “Free” money to pay your bills…or to buy something…or to start a business?
For years now this guy has made a fortune selling publications that are full of information that is free and available to the public. There is nothing inherently wrong with charging for the convenience and reprinting cost of information that would have taken considerable time to gather and publish…that is not where I take issue.
In fact, there is no problem with telling people that there is grants, direct payments and assistance programs available for everything from paying your heating bill to starting a business…however slim the chances are of you getting any of them.
The problem is the tricky semantics he uses to make you think there is a lot of free money or grants out there.
For example a classic Lesko line is:
(Holding up a piece of paper) “Here…answer 15 questions and get a $4000 grant to fix up your home! Or fill out one page and get $150,000 to start a business.”
To the common person you might believe that the $150,000 is in the form of a grant because the proceeding program he spoke of was a grant. The fact is the document he is holding up is for an SBA guarantee on a small business loan…which is not a grant at all…it’s not even a low interest rate loan. But…if you read what he said carefully you will realize that he didn’t say it was a grant or even free money. He simply said that you can get $150,000 to start a business with that document…and that’s true IF you can find a bank to finance you and IF you have a business plan and IF you have a down payment and collateral, etc…
Need another example?
OK…his Free Government Money for Business website he lists among hundreds of other claims: “75,000 to create a job in North Dakota.”
Well I just happen to live in the Great State of North Dakota and I assure you there is no program that will give you $75,000 to create one job. There is however a program run by the Bank of North Dakota called Partnership in Assisting Community Expansion (PACE).
The PACE buy down is a grant. However, the grant money is used to reduce the interest rate of a loan you borrow up to 5 percentage points. The grant money comes partially from the Bank of North Dakota and the job creation Lesko is referring to is as follows: The borrower shall demonstrate that within one year, there will be a minimum of one job created and retained for every $75,000 of total loan proceeds.
But there are other requirements that must be met. 35% of the interest buy down money must be raised from a local Economic Development Group and they may have requirements of their own. For example minimum job creation requirement such as 50 or more jobs. In addition, the business has to be primary sector with more than 75% of their sales coming from out of state. Finally the job have to be created in specific industries such as manufacturing or value added processing. And all of this is predicated on getting a big loan in the first place…which is definitely not free money.
So you see the program is much more complicated than getting $75,000 to create a job in North Dakota.
So lesson #1 is to realized that not everything he talks about is free money. in fact according to Lesko’s own blog response to a detractor:
If your reporting ever did take you to one of our workshops or if you spoke with anyone who ever attended one of our workshops, you would learn that we never make promises about any government money being available to an individual or organization. The only thing we do promise is that if you are unsatisfied with one of our products you can return it for a refund.
So what are they offering…I will try to cover that in Part 2
Good Luck
Mr. BizPlan
Free Money to Pay Your Bills Not Quite - To learn more about this author, visit Donovan Wadholm's Website.
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Matthew Lesko is my nemesis.
You know the crazy guy on late night infomercials prancing around in his question mark suit screaming about “Free” money to pay your bills…or to buy something…or to start a business?
For years now this guy has made a fortune selling publications that are full of information that is free and available to the public. There is nothing inherently wrong with charging for the convenience and reprinting cost of information that would have taken considerable time to gather and publish…that is not where I take issue.
In fact, there is no problem with telling people that there is grants, direct payments and assistance programs available for everything from paying your heating bill to starting a business…however slim the chances are of you getting any of them.
The problem is the tricky semantics he uses to make you think there is a lot of free money or grants out there.
For example a classic Lesko line is:
(Holding up a piece of paper) “Here…answer 15 questions and get a $4000 grant to fix up your home! Or fill out one page and get $150,000 to start a business.”
To the common person you might believe that the $150,000 is in the form of a grant because the proceeding program he spoke of was a grant. The fact is the document he is holding up is for an SBA guarantee on a small business loan…which is not a grant at all…it’s not even a low interest rate loan. But…if you read what he said carefully you will realize that he didn’t say it was a grant or even free money. He simply said that you can get $150,000 to start a business with that document…and that’s true IF you can find a bank to finance you and IF you have a business plan and IF you have a down payment and collateral, etc…
Need another example?
OK…his Free Government Money for Business website he lists among hundreds of other claims: “75,000 to create a job in North Dakota.”
Well I just happen to live in the Great State of North Dakota and I assure you there is no program that will give you $75,000 to create one job. There is however a program run by the Bank of North Dakota called Partnership in Assisting Community Expansion (PACE).
The PACE buy down is a grant. However, the grant money is used to reduce the interest rate of a loan you borrow up to 5 percentage points. The grant money comes partially from the Bank of North Dakota and the job creation Lesko is referring to is as follows: The borrower shall demonstrate that within one year, there will be a minimum of one job created and retained for every $75,000 of total loan proceeds.
But there are other requirements that must be met. 35% of the interest buy down money must be raised from a local Economic Development Group and they may have requirements of their own. For example minimum job creation requirement such as 50 or more jobs. In addition, the business has to be primary sector with more than 75% of their sales coming from out of state. Finally the job have to be created in specific industries such as manufacturing or value added processing. And all of this is predicated on getting a big loan in the first place…which is definitely not free money.
So you see the program is much more complicated than getting $75,000 to create a job in North Dakota.
So lesson #1 is to realized that not everything he talks about is free money. in fact according to Lesko’s own blog response to a detractor:
If your reporting ever did take you to one of our workshops or if you spoke with anyone who ever attended one of our workshops, you would learn that we never make promises about any government money being available to an individual or organization. The only thing we do promise is that if you are unsatisfied with one of our products you can return it for a refund.
So what are they offering…I will try to cover that in Part 2
Good Luck
Mr. BizPlan
Free Money to Pay Your Bills Not Quite - To learn more about this author, visit Donovan Wadholm's Website.
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