Small Business Cents

[#1]

If you have looked for a government grant for your business, it is very likely you have encountered several websites promising access to "free government grants that you don’t have to pay back" and testimonials from apparent business owners who received tens of thousands of dollars to start a business.

Are these legit?  No.  They are scams.  Here’s how they work:

The company guarantees that you will get a small business grant or your money back. For a fee of $30 - $50 you get a subscription to a grants database, or a grant package with information on how to write a grant proposal and a list of government agencies that provide business grants.

You pay the fee and you may (or may not) get information. However, the government agencies listed do not actually provide grants to help start or expand a business.   In fact, you'll probably find it difficult getting your money back, and you could lose more than your initial investment if you've signed up for a subscription with a credit or debit card. 

Economic Stimulus Grants

The recent Economic Stimulus package signed by President Obama has created a whole new class of scam sites offering information on stimulus grants for individuals and small businesses.   These sites are particularly preying on small business owners who are struggling to stay in business and in search for money to keep them afloat.

As tempting as it may be to explore these programs offering free stimulus money, you will be wasting your money by signing up with one of these websites. There is no money in the stimulus package for sending individual checks to small business owners. 

And contrary to what you may read, the government does not secretly give away excess budget money to individuals in the form of grants. There is no secret door with free money behind it. 

Scam Sites about Scam Sites

So, the scammers have figured out people are on to them. They are now setting up websites that discuss government grant scam sites, and promote a list of websites that claim to provide legitimate grant information.  Many of these sites are just fronts for scam sites.

Grant Information is Free

Government agencies publish grant information on the web, and make it accessible for free. You do not need to pay anyone to access grant information. Grant information is easily accessible by visiting agency websites, searching on your favorite web search engine, or using one of these databases:

• Business.gov's Loans and Grants Search Engine provides legitimate small business loans and grant programs (when available) for which you might qualify.  Currently, this tool contains mostly loan programs, but we are continuously updating it, and will add relevant grant programs as we identify them.

• Grants.gov is database of federal grants, most of which are available to non-profits, cooperatives, other government agencies, and academic institutions.  Grants.gov is the one-stop resource for finding grants offered by federal agencies. Some grant programs do allow eligible for-profit entities to compete for grant money, however, these are highly specialized programs, such as specialty crop research.  However, you won't find small business grants for starting a business, paying off debt or otherwise help for running your business.

The Bottom Line

The bottom line is that Federal and state agencies do not provide small business grants for starting a business, paying off debt, or to cover operating expenses. However, government agencies do provide guarantees on low-interest loans for these purposes.  You can use the Loans and Grants Search Engine to find programs for which you may be eligible.

For more information on government grants, visit the following resources:

• 'Free Government Grants' : Don't Take Them For Grant-ed (Federal Trade Commission)
• Government Grant Telemarketing Scams (Federal Trade Commission)
• Grant Companies Exploit Confusion over Stimulus Bill to Rip Off Consumers (Better Business Bureau)
• Government Grants Guide (Business.gov)

If you have paid money to a grant website, and feel you have been the victim of a scam, you can contact the Better Business Bureau and the Federal Trade Commission's Consumer Complaint page.

Message Edited by BobK on 03-20-2009 12:51 PM

[#2]

Hi Bob,

Thanks for posting this, I'll put up a link to this excellent little article on my blog.

A little over a month ago after witnessing the surge in grant related scam sites I started my Grant Money Scams blog about this idiotic phenomenon as well as a Grant Scam Site Blacklist of offending sites.

Note: this blog is not one of those fake 'scam sites about scam sites' that you mention in the article; I do not provide external links to these scam sites nor do I affiliate with any of them. 

Message Edited by NicoleD on 08-18-2009 09:38 PM

[#3]

Bob, it was probably inevitable that the scammers would show their ugly heads.  Sadly, so many businesses are just so desperate for cash that they have a bigger audience that we would ever have anticipated.

While broadly speaking the government does not give grants to businesses, there is another way of approaching the topic.  Most people automatically think of a grant as a "gimme".  That really isn't accurate.  Most business grants require that specific tasks be accomplished, and often the grant is released in stages depending on the completion of certain tasks.  Those "tasks" are often related to scientific matters, but can also be related to reviving slum areas, training minorities for jobs, providing childcare in needy areas, as well as a host of other tasks, some in other countries.

If we can look at "grants" as "tasks that need to be accomplished, that just happen to be financed via a grant vehicle" then thousands more opportunities open up.

And we don't have to stop at federal grants.  There are local, state and regional grants as well.  Even lots of grants from non-profit institutions.

All of these grants basically say, "Here's a job.  Can you do it?"

Responding to the grant requests with "Yes, I can!" means setting forth a specialized business plan, one that addresses the specific job at hand.

Yes, grants are still difficult to come by.  We are in a tough economy.  But let's look at the positive side, and get our energy working for us.

[#4]

I see ads for this sort of thing all the time. Lots of email scams to, I think thats the #1 thing to be wary of. Usually banner ads aren't as frequent because the advertising networks don't let 'scams' get through, at least the reputable ones. 

Omer A.

MMORPG / Game Music Site Owner

VG Alliance LLC (New Jersey)

Message Edited by NicoleD on 09-11-2009 09:52 AM

[#5]

Im receving noumerous e-mails promising free government grants for business lately.. Ive must have been left my email on some spam site.

I just hope that there are not many peaople who actually pay money to a grant website.. 

Apartmani Rovinj

Message Edited by NicoleD on 09-11-2009 09:52 AM

[#6]

It is an obvious fact that some grant programs do permit eligible for-profit entities to compete for grant money, nevertheless, these are highly-specialized special programs (specialty crop research for example).

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Message Edited by NicoleD on 09-11-2009 09:53 AM

[#7]

That's just low, even for scammers. I don't know how they do it, but I thought that people always would trust governmental sites above others. It's good to always look to the source and do some homework so that you don't pay for free government grants.

Inktknal Oosteeklo

Message Edited by Christine_Lai on 09-08-2009 12:13 PM

[#8]

Many are tricked, in part, because these government loan scams use real sounding names to fool people. Some of the scams use actual names of well known financial instutions and government agencies. If you go to their website it will probably look very respectable and sophisticated. Designing a legitimate looking website is part of the scheme. If you're sent to a website for more information or to fill out forms it makes many people feel more comfortable with the whole deal. The part that fools people is that the website domains will be just a little bit different than those of the real financial or government websites. Just different enough to trick you. Real government websites usually, but not always, have domains ending in .gov which is difficult to forge. 640-802 Bear in mind that you can make a link say anything you want. Where that link takes you is another story. When the link says government-loans.gov but once clicked you are taken to government-loans.com you should be on your guard.

Message Edited by NicoleD on 08-18-2009 09:39 PM

[#9]

The internet seems full of ads for free grants for just about any purpose imaginable - education, home repair, just to name a few.

Here in Croatia, government grants are usually awarded to groups or individuals who are using the money to help their communities, not to individuals !!!. 

The Croatia government also does not charge a processing fee for their grants as their services are funded by tax dollars.  Another key difference between legitimate government grants and scams is that you will not be asked to provide personal information over the phone.

Message Edited by NicoleD on 08-26-2009 10:05 AM

[#10]

Thanks for creating awareness about scam sites and how they are going to cheat. Thanks for this information.

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Message Edited by NicoleD on 09-07-2009 05:05 PM

[#11]

I think today one must pay close attention to what is offered on the web, especially when it asks for money and does not provide any guarantees...

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Message Edited by NicoleD on 09-11-2009 09:53 AM