7 Tips to Avoiding Scams with Free Grants

You probably have more than one idea lurking in your mental closet somewhere right now only you don’t have the necessary funds to turn your ideas into something bankable. No worries. You are not alone. In fact, many individuals are looking for grants or “free money” to put their ideas to work and start their own business.

Getting free money from free grants is easy. The Internet and classified ads say so. Here’s one example lifted from an email:

“Free money! Never repay cash grants for personal needs, medical bills, education, business, debt consolidation, and more. For only $29.95 (plus shipping), we can send you 7 publications that have all been stamped ‘WINNER OF THE PRESTIGIOUS EXCELLENCE IN PUBLISHING AWARD’, plus 90-day money-back guarantee!”

Why, from this advert alone, you can say that lots of money is out there just for the taking!

Or is it? Is there really free money out there for small and home-based businesses? Can you really turn your ideas into dollars with money from free grants? And do people really give free money just like that?

The answer is “Yes” and “No.”

The Truth about Free Grants

It is true that there are hundreds of millions of dollars in grant funding available free to entrepreneurs and small business owners. This money comes from various sources, including government, non-governmental organizations, and private institutions.

In fact, the Federal Government of the United States allocates no less than $67 billion in grants awarded to deserving organizations and individuals. These federally-funded grants may come in the form of community-based projects, such as street-paving, student financial aid, health services, etc.

The amount you may receive from free grants ranges from $5,000 up to some in the six figures. It all depends on how much money is available and the budget outlined in your project proposal. So if your project is large-scale, such as one that involves construction work, then the grant money you receive may be higher than most.

But best of all, what makes free grants truly tempting are the fact that they absolutely require no payback…. It is a grant, after all, not a loan. And that is precisely the reason why many people advertise free grants as “no-obligation free money.”

However, the truth to adverts on free grants is only up to there.

For one, grants really don’t have to be repaid, so there’s no point (other than to deliberately mislead people) in labeling it as “free money.” If something is free right from the start, then why call it ‘free’? It is obvious that by giving it the name “free money,” the purpose is nothing more than to defraud people into thinking that they are getting something for free because of the efforts of the person advertising such claim. The truth couldn’t be any further from that.

As far as free money available for entrepreneurs who want to start a for-profit small business, funders may not be so lenient. There is no such thing as “no-obligation free money.” Sure, with free grants, you are not required to pay back the amount, but the awarding of a grant may come with its own set of conditions, rules, and obligations that you have to comply with, or risk getting sanctions from your grant provider. And if your grant provider is the Federal Government, then you may even have to go to prison for non-compliance with the obligations of your grant. So you see how stiff the bargain can be – you get free money but follow all the rules.

Free money intended for starting or expanding a small business is nothing more than a myth. The truth is that most funding institutions do no provide grants or “free money” for starting or developing a business at all. Nor will they give you money so you can pay your medical bills, consolidate your debts, or pay for your education. No grant provider would even consider personal debts as proper subject matters of a grant.

The Small Business Administration, Bank of America Foundation, and other grant funding sources do not give capital to start a day-care or clothing design business, etc. Nor do they provide grants to individuals who will use the proceeds to start their own for-profit small business.

Grants are usually given only to serve a social good such as bringing jobs to an area, training under-employed youth, preserving a bit of history, etc. In fact, every legitimate granting source has very specific requirements about who might qualify for funding. So unless you have a project in mind concerning a particular community, grant money may not be available to you.

The Federal Trade Commission or the FTC, the nation’s consumer protection agency, warns that “money for nothing” grant offers often are a scam. The grant is not free. It is not guaranteed. And often, it is not even available to you. To get a grant, you need to pre-qualify and apply for it first. If you don’t qualify or if your application gets rejected, then the money and effort you spent on your free grant application would have been all in vain.

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