An Overview Of Government Grants

There's no such thing as free money. Although a government grants may seem like "free money", technically they are not. After receiving a grant, the grantee has to meet certain requirements of the grant to maintain eligibility.

The grantee can determine the amount of money they wish to apply for. However, they must meet the requirements as set forth by the agency for the grant in question. The grant money is non-taxable and also interest free. It may seem surprising, but the government grant programs do not require the applicant to submit a credit report, provide a security deposit or collateral or even provide a cosigner. It doesn't matter if you have declared bankruptcy or have a terrible credit rating. As long as you are over 18, a US citizen and meet all the requirements of the grant program, you may apply and are eligible to receive an award.

There are two different categories of grants. The first is the general purpose/operating grants. General purpose grants are when the government awards a grant to your company or organization to be used in covering the operating and general expenses within your business or organization. Operating grants are those in which the lender backs the company or organization's purpose and invests in them in order to make the most out of the funds that they grant to them.

The second grant classification is program support or program development grants. These grants are those in which the government agency not only supports the procedures but also the processes of the company or organization. The following are some examples of these type grants:

• Facilities and equipment grants Also known as capital grants or facilities and equipment grants. These grants assists the company or organization in buying tangible assets. For example: buildings, computer hardware, equipment or even for the purchase of vehicles. The applicant must defend the grant he is applying for. The applicant must address how the grant will help the company or organization and be of benefit to its customers or members. Applicants are also required to provide regular progress reports to the government.

• Planning grants
  A good deal of money and time is spent figuring, working on and planning a major new program for your company or organization. These grants can be used for research and planning.

• Start-up grants
  Also known as seed money, start-up grants assist a company or organization during its formidable years. It is like a "kick-start" for the business or organization. It helps them focus on the business at hand and work towards success without concerns about finances . These grants are frequently for more than than a year in length and the funding decreases over time.

• Program Related Investments or PRIs
  The IRS allows non-profit organizations to also apply for loans. The PRIs that have been approved are projects that met the requirements to be eligible for a grant . Customarily, they are awarded as a low or sometimes zero-interest loan. But, it is a loan and therefore must be paid back by the company or organization. PRIs are often the ones involved in the building project of charities.

• Endowment grants
  Non-profit charities have money set aside that they use to invest and earn interest in the future. The principal sum is protected because they only spend the interest and leave the principle alone. Endowment grants are popular with colleges and hospitals. Many hospitals and college fund-raising efforts start from these kind of grants. But the government ensures that the interest on the principal sum remains the same so that there is no need for the endowment to fulfill the any operating costs.

The government awards these grants in good faith and for the betterment of the people and the economy. It is our duty and obligation to use these grants to the best of our ability and to use them only for the intent of which they were granted.

To your success...

United Entrepreneurs' Staff