Small Business Grants

Small Business Grants: The Pros and The Cons

Small Business Grants are like financial gifts from the government to organizations. They can also be handed out by a private business that has enough money to give out grants. Grants are not like loans, so there is no need to be worried about repayment. However, as great as grants sound, they are not always the best solution. Here is a list of the pros and cons of small business grants:

The Pros of small business grants

Beginning with the advantages, here are some of the reasons grants aren’t such a bad idea:

  1. You don’t have to repay a grant: Who doesn’t love free money? Many people who want to start a business are usually held back by one thing – capital. Not enough money is one of the main reasons many businesses shut down, get sold, or remain an idea. With a business grant, this issue is somewhat eradicated. But the best part of it is that when you do get the money, you don’t have to be worried about returning it. This is also one of the things that make a grant a better alternative to a traditional loan (this requires repayment WITH INTEREST!).
  2. The second advantage is that it is relatively easier to find information about a grant online. Checking for the availability of a grant as well as what organizations give grants is easy. Besides, there are usually several options you can choose from. So, you can always go for the ones that suit your needs the most.

Now that you the cons of small business grants, what are the cons?

The Cons of small business grants

Below are the reasons why a grant might not be the best idea. Note that the disadvantages don’t mean that a grant is bad, it only means that those are the things you should expect to run into when applying for a small business grant. So without further ado, here are the disadvantages that come with a small business grant:

  1. There are strict rules: As great as it sounds to get free money, it’s not that simple. For example, the federal or state do not give out a grant for organizations that are not already established. Also, if you happen to be in debt, you cannot apply for a grant.
  2. It takes time to be approved: Waiting for a grant to be approved or not can take weeks or months. So it is usually not great for those that need the money urgently. It’s even worse when you have waited for months only to be notified that you weren’t approved of the grant.
  3. Your private business is no longer ‘private’: If a business is awarded a grant, it is immediately subject to regular and constant supervision to check the progress of the business with the grant awarded. The supervision doesn’t go without the submission of monthly or quarterly reports. It is simply to make sure that the business is working (and seeing results) as outlined in the grant proposal.
  4. It takes time to apply: In return for the ‘free money’, you might have to sacrifice your time. Applying for a grant is not only time-consuming but also stressful. You would have to submit tons of documents and don’t forget that the processing already takes time.
  5. The competition is tough: It’s simple. Your business isn’t the only one looking for money that doesn’t have to be repaid.
  6. The eligibility requirements are strict: This can be both a good and a bad thing. It’s a good thing because many small businesses would already be frustrated by all the paperwork and requirements and that would make the competition lighter. The bad news is that you could be part of the frustrated business owners.
  7. The purpose of the grant application has to be justified: You need to explain why you need the grant using statistical, quantitative, and qualitative justifications. You need to put together a highly descriptive and detailed proposal discussing where your business is at, what it needs, and how the grant will help you reach the goal. You also need to critically explain each step of the process with demographics and charts to back things up. The grant issuer needs to be sure that your business will not waste the grant on selfish dealings.


Grant writing does seem to have more cons than pros and though some people would still go ahead to apply for a grant, a majority would be looking for alternatives. There are other options for small business grants like a line of credit. A line of credit is like a credit card for a business but its limit is much higher. Another option is to apply for a small business loan. It’s better for long-term investments and the interest rate is much lower.

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