The Truth About "Free Grants" for Entrepreneurs
As the old saying goes, "if it sounds too good to be true, it usually is."
The good news is that there really are legitimate free business grants out there!
I know from first-hand experience. In 2006 I won a total of $4,000 in grant money to start a new for-profit business venture. (Read my story here .) These were grants, not loans. In other words, it was money I didn't have to pay back to a bank and I also didn't have to give up control of my business to any investors in exchange for the money. No credit check, either.
Three of my personal friends – two African-American men and one African-American woman – also won $20,000 each in business grants. Can you say... "Ka-ching!"
So how can you tell the legit business grants from the fakes? You should look for these signs:
1. Free access to grant information.
You shouldn't have to pay for any list of grants or grantmakers. The organizations who make real grants want as many people as possible to know about them, so information about their grant programs is disseminated free to the public.
2. Who's giving out the money?
Look for a reputable organization with a genuine incentive to give out the money. For example, state and local governments, economic development offices and chambers of commerce who have a real need to stimulate their local or regional economy with strong businesses. Colleges and universities who want to strengthen their business programs by supporting strong entrepreneurial ideas and innovation. Large corporations who want to connect with and cultivate their target market of small business owners.
3. Contests, contests, and more contests!
I've found that the overwhelming majority of business grants are offered in the form of business plan competitions or business idea contests. Some are exclusively for African-Americans, some for women, some for business owners in a particular geographical area. Both of the grants I won were from business plan competitions: the Miller Brewing Company Urban Entrepreneurs Business Plan Competition for minority entrepreneurs age 35 and under, and the StartRight! Business Plan Competition for Women in the greater Washington, D.C. area.
Don't let the thought of writing a business plan scare you! Many of these grant organizations offer free training on how to write a business plan and even how to present it. They offer free access to professional advisors – bankers, executives, venture capitalists, angel investors, other highly successful entrepreneurs – who want nothing more than to give you advice and see your business succeed. These contacts are worth gold, and the process of writing a plan for your business will really help you create a roadmap for success.
And if you still decide that writing a plan isn't your thing, there are lots of contests where you can win prize or grant money for a one-paragraph explanation of your unique business idea -- I've even seen one contest where you had to write and submit your idea on the back of a napkin!
4. Nominal application fee.
Any fee to apply for the grant or contest should be nominal (under $40, depending on the total grant being given) or even free. High entry fees are a big red flag.
So where do you find these grants and contests?
1. Google it. Search for terms like "African American business plan competition" or "business idea contest" or "grants for women entrepreneurs."
2. Keep an eye out for advertisements and announcements in national small business magazines.
3. Check with your local chamber of commerce, Small Business Development Center office, and/or office of economic development. Get on their mailing lists.
4. Along with my pal Donna Maria, I keep a list of upcoming business grants on our Bootstrap Babes blog, along with other tips and resources for business owners on a budget. Visit, sign up to get updates delivered to your in-box, and join our conversation!
Now you got the knowledge. Go get the money!
© Copyright Jamila White. All rights reserved.
