Small business is categorized by their small capital, productivity, manpower, and profit. Some of the small business start-ups are self-financed. But most of them are financed by borrowing money. In order to prevent higher down payments of interest to banks, the Government of many countries provides small business grant. The small business grant helps the entrepreneur to receive the principal amount without having to worry about the future repayment of it.
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The small business grants help in boosting the growth of small firms since the financial aid received from is a stable and reliable source. Small business grants are mostly obtained from the national Government or from the state or local authorities. Some industrial organizations or established corporations also provide such grants but are not always desirable.
Small business grants provide limited funding. The funding is targeted in specific areas. The main area is principal amount where capital investment is very low or unavailable. Small business grants are also provided for business related to farming, fishery or husbandry. The small business grant is targeted towards funding for hiring of manpower or for purchasing of new machinery and other equipment’s. If a separate building is required then the small business grant is directed towards purchasing of the land and constructing of the required structure. For more established businesses, the small business grants provide financing for research and development and improvement of technology. Furthermore, small business grants are provided for small businesses with foreign exports to enhance international trade.
In order to avail the small business grant, a well drafted business plan is submitted to the Government or authority providing the grant. Usually, the loan provider is the Small Business Administration. The borrower should clearly mention the areas where the grant money will be invested. It is expected that 50-85% of the grant money should be invested into the business. The independent company award is supported exposed to ensure. Upon endorsement, the credit examination is done and the last report is submitted to the business moneylender. The bank straightforwardly dispenses the sum to the entrepreneur. The credit reimbursement is done on regularly scheduled payment premise to the business moneylender.
In the US, obtaining a small business grant for startup businesses is rare. It is provided only for selected category of businesses, especially those into higher technology. It is a time-consuming procedure for the companies to obtain the small business grants. Hence such startup companies approach major corporations that provide the small business grants.
In UK, obtaining small business grants is relatively easier. The best hotspot for private venture award in UK is the Princes Youth Business trust. They furnish business people matured 18-30 years with awards of £1500-£5000. For new companies, the trust gives £250 to advertising and exploration work. In order to qualify for the small business grant, the individual should prove the non-availability of capital and ensure that no other organization has provided the required funding. Also, the trust should be satisfied with the business plan that has been submitted by the business owner.
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