Small Business Loan or Government Grant?

A Home Business Article Contributed by Elizabeth Fox-Wise

Is There a Difference between a Small Business Loan and a Government Grant?

There is a major difference between a small business loan and a government grant. Be careful not to confuse the two of them. That major difference is that a small business loan is money that your borrow for your small business and it must be repaid (usually with interest); a small business Government grant on the other hand is "free" money given to you for use to start or expand a small business and it does not ever have to be repaid.

There may be other little differences between a small business loan and a government grant, but that one is a huge one.

Well If I Don't Have to Repay It....I Choose a Government Small Business Grant!

Wouldn't we all? How wonderful that sounds. You hear the promises all the time "Free Government Money To Start or Grow your Small Business" It seems every where you look someone is trying to sell the "secrets" to Government grant money. They are marketing these small business government grant "tools" in the form of books, videos, training programs and more! But can it really be true? Is the Government really looking to give you free money, which you never have to pay back, so that you can start or expand your small business?

Not likely. Unless your small business in a nonprofit business (I know it FEELS like a nonprofit some months - but most of us open a small business FOR profit! ) or it is in a cutting edge field where technology and research is needed and might be government funded, then your chances of qualifying for a government small business grant are very slim.

Because of the very few areas of small business that might be eligible for a government grant, it is probably not wise to spend money on a "middle man" to give you information about them. Instead, you should contact the Small Business Administration which is run by the US Government and handles the disbursement of small business grant money when it is available.

So If Not Government Grant Money....I Guess a Small Business Loan

A small business loan is easier to obtain than government grant money. Of course, a small business loan must be paid back and usually with interest. While it is not always easy to get a small business loan from a bank, it is no longer as hard as it once was. If you have a solid, clean personal credit rating, and your small business has a well thought out well written business plan, you may be able to get a small business loan from a bank without trouble.

If you do have trouble getting a small business loan you can turn to the Small Business Administration for assistance. While they do not directly loan money to small business owners, they will "guarantee" your loan request to a bank which will make your chances of securing the small business loan much easier. The SBA will only assist; however, after you have tried to get a loan on your own and were turned down.