“Free government money to start your business” is one of the most common online promises, and one of the most misleading. Grants exist, but they are limited, competitive and usually aimed at specific purposes.

The truth about government grants

• The federal government generally does not give grants to start or grow an ordinary small business.
• Federal grants that do exist are mostly for research and development, such as the SBIR and STTR programs for tech and science companies.
• Some state and local governments offer grants for specific goals, like disaster recovery, façade improvements, job training or businesses in certain neighborhoods. They come and go.
• The SBA mainly offers loans, guarantees, counseling and contracting help, not grants to individual businesses.

Private grants

Corporations, foundations and nonprofits run grant contests, some for women, Latino, veteran or minority-owned businesses. Typical features:

• Amounts are often small.
• Thousands of applicants compete.
• They usually want a compelling story, community impact and a specific use.

They can be worth applying for, but do not build your plan on winning one.

How to spot grant scams

• They contact you first (“You’ve been selected for a $10,000 SBA grant!”).
• They ask for a fee to “release” or “process” the grant.
• They ask for bank login information.
• They pressure you to act now.

Real grants never charge you to receive money. Read loan scams targeting Hispanic owners.

A better plan

Combine your own savings, a microloan or CDFI loan, and free help from your SBDC. Apply for legitimate grants on the side. Check your options with our quiz.

Frequently asked questions

Does the government give grants to start a business?

Generally no. Federal grants are mostly for research and development, like SBIR and STTR. The SBA mainly offers loans, guarantees and counseling.

Are private small business grants legitimate?

Many are, but they are small and competitive. A real grant never charges a fee.

How do I spot a grant scam?

They contact you first, ask for a fee or bank login, and pressure you to act now.