Tweet

Grants 101

Written by: Brandy Adamson

Article Overview: This article discusses some of the misconceptions about grants.

Grants 101

I have received many email and telephone inquiries about applying for grant monies. It is important to realize that grants are provided to non profit organizations. Generally, grants are not provided to individuals or for profit organizations. Grants are established as a way for philanthropists to support organizations and causes of interest. There are ways for individuals that want to establish a for profit organization and gain financial support for that endeavor. For more information see our article on Funding Your Start Up.

When you read or research a grant, there will be information that details who is eligible to apply for the grant, the grant requirements and the deadline for application. Do not apply for grants for which your organization is not eligible. To apply for a grant, your organization must be a non-profit organization and have its 501 c 3. This gives proof that your organization is in fact a non-profit organization.

When you review the grant requirements complete all parts of the application and provide all information requested. Many organizations are now requesting online application rather than paper applications. When organizations provide an incomplete application packet, the grantor will not review the application. Remember, in most instances there are an enormous amount of grant applications received and the grantors do not have the time or resources to review incomplete applications to contact you and request the missing information. If you have questions about the grant or its requirements, contact the grantor and ask questions. Most grantors appreciate grantees inquiries.

Organizational collaboration is important when requesting funding. Larger grantors are now requesting information on how organizations are collaborating rather than duplicating services. If you are duplicating services, why not collaborate with those already existing organizations that provide those services. By collaborating, the grant dollars are better utilized and organizations are more efficient.

There are many online resources for non-profit organizations to find grant opportunities and how to apply for the funding. There is also information available at your local library.

Related Articles
  Federal Grant Resources
  The Small Business Grant Misnomer
  Grants For Business Owners – Do they exist?
  The Recession and Canadian Government Grants For Business
  Small Business Grants and Loans

Article Tags: 501 c 3, application packet, duplicating services, email, endeavor, grant applications, grant monies, grantor, grantors, grants, incomplete application, incomplete applications, instances, non profit organization, organizational collaboration, paper applications, philanthropists, profit organizations, proof, telephone inquiries



Related Forum Posts
Re: Government Grants; sources and experiences - Quoting two investment experts on msnbc discussing grants for small business recently: Ken Yancey, CEO of SCORE "I've been doing this for 16 yrs and never met anyone that got a grant." Phil Town, bestselling investing author, "...must be 20-30 websites about U.S. grants. I think they're all scams." Government grants are not available for for-profit start ups. Grants that are available are generally for very specific geographic areas and/or for specific development (environmental for example) and/or for non-profits. These grants are usually meant to create jobs for under developed areas. I hate to see so many entrepreneurs waste valuable time and resources chasing non existent grants. When the CEO of SCORE says he never met someone that got a grant, it's time to sit up and listen. This is actually the very reason the new funding source (below) was created.
Different Types of Funding - Finance for business can be obtained through a number of different sources. Let's review some of those channels to help you decide what's right for your business needs: Grants There are over 930 different EU and UK grants and loans available from over 100 issuing bodies. This is the cheapest form of finance and an important part of the funding package that companies and individuals need. We can help you find your way through this maze. Technology Micro Projects: 50% of eligible costs up to £20,000 Research project: For a technical and feasibility study of an innovative idea for new technology 60% of costs up to a grant of £75,000. Development project: For development up to pre production 35% of costs up to a grant of £200,000 Developing an innovative idea: valuable for small companies and individuals at the start of a technical project: 75% of costs of hiring a mentor and consultants. Export To start exporting or moving into new markets grants of 50% of costs up to £20,000 each. Training and Education Knowledge Transfer Partnerships, Achieving Best Practice in Your Business, Investors in People Modern Apprenticeships New Deal for various grants. Environment BOC Foundation for the Environment: 25% to 50% of Project cost, typically £20,000 to £100,000 Clean up Fund: Emission reducing equipment up to 75% of cost Community Chest Fund: Up to £25,000 for projects near active SITA sites High Impact Fund: £150,000+ for larger projects near SITA sites Assisted Areas Regional assistance grants of between 10 and 35% for capital expenditure in less favoured areas of the UK. Loans Loans are an excellent source of finance if you have suitable security to borrow against or a reliable earnings stream. This needs to be planned and presented well to obtain funds. Credit cards Provides up to 56 days free credit if you play the game! Overdraft Banks are surprisingly supportive when presented with a well thought through plan and competent management. Bank Loans Lenders tend to look for a good business plan and security. Typically the loan is approved by a centralised back office function rather than the person you meet. Terms and rates depend upon the risk. Repayments can be very flexible to meet your specific needs. Mortgages These can include flexible repayment terms to meet your business needs. This can even be incorporated into your overdraft finance so that you have one flexible account for both personal/ business mortgages and overdraft Small Firms Loan Guarantee Scheme Up to two years trading: Up to £100,000 Over two years trading: Up to £250,000 However these are difficult to obtain and are a loan of last resort. Export Guarantee Scheme This is government backed insurance against appropriate export documentation. Mezzanine This is a halfway house between loan and equity. It can be an innovative way of raising funds for the more established business. Mostly for expansion capital. Equity This is not as easy as the papers would have you know. Only 1% of business plans received by Venture Capital Funds are successful. However, a good business proposition consisting of a strong demand for the product or service, management track record and a sound financial plan will enhance the chance of success. Business Angels These are high net worth individuals who are successful businessmen looking for investment opportunities. They can provide both time expertise and money. Typical investment size is £25,000 to £250,000 but can go as high as £2m for the right opportunity. Exit within 3-5 years. Venture Capital These are investment funds seeking high rates of return. However typically investments are over a million pounds. Some funds are targeted at lower amounts depending upon the sector and region. These funds are looking for exponential capital growth over 3-5 years. Asset backed finance This can cover machinery, sales invoices even sales orders. It can be a very flexible source of finance to the growing business Leasing This will cover your capital expenditure and spread the cost over a three to five year period. It is particularly useful if you do not have taxable profits to maximise your capital allowances. Sale and leaseback of a property you own is another good source of funds. Factoring Factoring offers a sales ledger administration and debt collection service. Up to 95% of an approved sales invoice is paid within 48 hours, quicker if required. Credit protection is also available to protect against a bad debt. The Factor will own and place a first charge over the book debts and they might also take other charges, depending upon the strength of the financial information. Invoice discounting Invoice Discounting can be Confidential or Disclosed; it depends upon the strength of the financial information. The service is the same as Factoring, except that the sales ledger administration and the debt collection is the responsibility of the client and not the Factor. Pre payment of the approved sales invoice is still up to 95% and the factor will still have a first charge on the book debt and therefore own the debt. This service can also have credit protection cover. All sales invoices need to be for a business to business debt, and some proof of delivery is generally required. Trade Finance This is funding provided against stock purchases, signed contracts and orders whereby the funder will prepay a certain percentage of the value Pension fund It may be possible to use your pension funds for a loan back to the business What do u think about it?


Share this article with your friends. Fund someone's dream.

Leave a comment below or share on the left and you'll help support entrepreneurs in Africa through our partnership with Kiva. Over $50,000 raised and counting - Please keep sharing! Learn more.

Tweet

Newsletter

Get advice & tips from famous business
owners, new articles by entrepreneur
experts, my latest website updates, &
special sneak peaks at what's to come!

Name:
Email:

Popular Articles

Looking for an Easy Online Business Opportunity?

TRADE SHOW FOLLOW-UP: HOW MUCH IS TOO MUCH?

Life, Conflict and Work

Suggestions

Email us your ideas on how to make our
website more valuable! Thank you Sharon
from Toronto Salsa Lessons / Classes for
your suggestions to make the newsletter
look like the website and profile younger
entrepreneurs like Jennifer Lopez.