Business grants are monetary amounts that are given to a business by another organization or by a government agency. Normally, the grant does not need to be paid back. However, grants usually come with “strings attached,” meaning that the business needs to use the grant money for purposes that are specified by the donor.
For instance, an organization might transfer a grant to a car company for the purpose of researching automobile safety. Or, a business might give another business a grant that is used to produce a certain product. Thus, grants are similar to loans except that they generally don’t need to be paid back, and are to be used for specific purposes.
What Should Be Included in a Business Grant Contract?
When transferring a grant to a business, it is usually necessary to create some sort of contract or other legal document that records the transfer. The contract or document should contain vital information, such as:
- Which parties are involved
- How much money is to be transferred
- When the money is to be transferred
- Whether the business needs to use the money for a specific purpose
- Whether there are any consequences if the money is used for a different purpose
- Other information, such as whether the grant is renewable (for instance, to be paid again the following year), or whether it is a one-time transfer
Thus, business grants are not exactly the same as gifts. Most gifts do not have conditions attached to them, whereas grants are usually subject to conditions. These conditions should be clearly listed in the contract document, so that there is a record of the guidelines for using the grant money.
What If There Is a Dispute over a Grant Contract?
As you can probably tell, one of the main disputes regarding business grants is whether or not the business is using the money for the specified purpose. If the business fails to follow the conditions, it may be possible for the business to lose some of their funding in the long run. Also, there may be certain instances where a grant or a portion of a grant needs to be repaid (for instance, if there is an instance of over-payment of money).
Legal disputes such as these often require litigation to fully resolve. A lawsuit may be needed in order for the non-breaching party to be reimbursed for losses caused by a breach of contract.
Do I Need a Lawyer for Help with Business Grant Contracts?
Business grants can often be fairly complex transactions, especially for larger projects where higher amounts of funds are involved. You may need to hire a qualified business attorney if you need help drafting or revising a business grant contract. Your attorney can help review the documents to ensure that they conform to the laws in your area. If you need to file a lawsuit over a dispute, your attorney can provide legal representation during the process as well.