Going For The Grant
Looking for a grant to build a business in a particular geographic area? Hire certain workers? Launch a new technology? Best of luck.
While grants are the lifeblood of many a nonprofit, educational institution and social service agency, grants for for-profit businesses are almost a misnomer.
“In the broadest terms, if you are looking for free money because you cannot afford to start or grow your business, don’t go looking for grant money.”
So says Mary Rogers, regional director of the Michigan Small Business Development Center (SBDC).
“There are very few grants available and none represent ‘free money’,” she said.
The idea that there are grants aplenty for businesses may be one of the bigger myths out there – and it continues to be perpetuated, according to area business consultants.
Blame it on the late night infomercial. You likely know the one – featuring “that question mark guy” (because of his trademark question mark suits) yelling to America about how to get free money from the government for your business?
Ever since him, Rogers said, “people like me and my staff became the wet towel at the party.”
Chris Wendel, a commercial lender for Northern Initiatives – which provides businesses in Michigan and northeast Wisconsin with access to capital, business resources and markets – concurred with Rogers’ sentiment.
“I liked to say ‘I gave it out last week,’ said Wendel of the inquires he used to get about grant money for businesses when he worked for the SBDC. “There are excellent government financing programs for businesses,” Wendel noted, but those don’t generally include grant dollars. “It’s approaching urban legend status.”
Mining For Money
But like anything, there are exceptions to the general rule. Hard to come by as they may be, grants do exist – either for very specific types of businesses or projects, or with government or a 501(c)3 acting as a fiduciary.
One business sector that is seeing some grant activity is agriculture and farming through the United States Department of Agriculture, noted Wendel
Specifically, the Value-Added Producer Grant aids agricultural producers in business activities related to the processing and/or marketing of agricultural-based products.
The grants are generally used to fund feasibility studies and business market plans related to expansion of value-added agricultural products, explained Alec Lloyd, public information coordinator for USDA – Rural Development in Michigan. Products such as jams, jellies, wine, spirits – virtually anything that adds value to an agricultural product be it a peach, a pear or an ear of corn.
Last fiscal year, the program funded four projects at $300,000 each, Lloyd said, including one for the Mackinaw Trail Winery in Petoskey. Applications are accepted on an ongoing basis, with more information by calling the Traverse City office at 941.0951 or by vising the website: rurdev.usda.gov/RD_Grants.html.
When the Leelanau County Economic Development Corp. disbanded in 2013, it dispersed its funds in the form of $1,000 and $1,250 grants to 18 Leelanau County-based businesses. Funds were used for operating capital, new products or services, or capital improvements.
“Things like that do come along,” said Wendel of the Leelanau business grants. “But again, that’s the exception.”
There are some micro-grants of between $200-$1500 available for starting or expanding micro-businesses, Rogers added. “These come and go, and are usually for a targeted demographic with extensive application paperwork.”
While the U.S. Small Business Administration does not provide grants for starting or expanding a business, there are some specialized federal grants for specific fields or industries identified by the government as being important.
For instance, if a small business is engaged in research and development (R&D), it may qualify for federal grants under the Small Business Innovation Research (SBIR) and the Small Business Technology Transfer (STTR) programs. Both programs encourage projects that meet federal R&D objectives and have high potential for commercialization.
As far as state grants are concerned, Rogers shared a note of caution.
“People should keep in mind that government grants, from the Michigan Economic Development Corp. or Michigan Department of Agriculture and Rural Development, are established to enhance the economy, not a single business owner’s profits,” said Rogers.
As such, most grants require matching private dollars, a municipality as the grantee, a guarantee of a number of newly created jobs as a result, or combining the grant with other forms of financing.
“A downtown area may apply for these grants, not a single business,” said Rogers. “Of course, there are exceptions.”
One resource for locating grants is Michiganbusiness.org (“capital” tab in the Start Up section). Another one – specific to agriculture – is Michigan.gov/mdard (Farm, Business & Lab Services tab).
In terms of private grant funds there are programs such as Start Garden, an investment fund that competitively selects projects to support. Locally, Sillikids, Mello & Co. and ERG! Bars are companies that have found recent success with Start Garden. These private programs all have their own processes and, perhaps most importantly, require the business owner to publicly state the business plan – something not every startup is willing to do, said Rogers.
While Rogers said the SBDC has assisted in writing grant proposals to government agencies and developed pitches for private monies, it is a “very small part of what we do. We do not help startups search for grants.”