Many small businesses depend on some type of financing option in order to help with expenses, especially when it comes to start-up. For instance, many small businesses start off after obtaining some sort of small business loan. A small business grant is similar to a loan except that it doesn’t need to be paid back. They are usually a portion of money that is specifically allocated for a set purpose.
In other words, you probably couldn’t run your entire small business operation on a grant; you’d probably need to supplement it with other financing such as a loan.
In many cases, the party issuing the grant may attach conditions to the grant (such as only using the grant for a certain purpose). For instance, the grantor may specify that the grant money be used specifically for:
- Research and development
- Advertising and promotion of the grantor’s interests
- Charity and non-profit related works
- Various other aims as specified by the grantor
Again, these conditions depend entirely on the party granting the money. In some cases, they might not attach any conditions at all. It all depends on the agreement between the parties.
Most small business grants originate from state governments or state-funded entities. The federal government doesn’t really issue small business grants, except for very limited purposes (such as promoting tourism or other specific interests). Also, private companies can also issue grants for small businesses.
A common dispute over a business grant is the use of the money. In most cases, there will be specific instructions regarding how the money can be used. This will likely be stated in the contract for transferring the funds. If the terms of the grant aren’t followed, the recipient will likely lose their grant, which can also have negative impacts on the company’s business reputation.
Small business grants can often involve very lengthy and technical contracts. These contracts can often extend over a period of many years, as the money is distributed in intervals over time. You may wish to hire a business lawyer if you have any questions or requests regarding small business grants. Your attorney can advise you on your options and can also represent you in court if you have a legal dispute.