Government Grant Scams

If you have looked for a government grant for your business, it is

very likely you have encountered several websites promising access to

'free government grants that you don’t have to pay back' and

testimonials from apparent business owners who received tens of

thousands of dollars to start a business.

Are these legit? No. They are scams. Here’s how they work:

The

company guarantees that you will get a small business grant or your money back. For a fee of $30 - $50 you get a

subscription to a grants database, or a grant package with information

on how to write a grant proposal and a list of government agencies that

provide business grants.

You pay the fee and you may (or may not) get

information. However, the government agencies listed do not actually

provide grants to help start or expand a business. In fact, you'll

probably find it difficult getting your money back, and you could lose

more than your initial investment if you've signed up for a

subscription with a credit or debit card.

Economic Stimulus Grants

The

recent Economic Stimulus package signed by President Obama has created

a whole new class of scam sites offering information on stimulus grants

for individuals and small businesses. These sites are particularly

preying on small business owners who are struggling to stay in business

and in search for money to keep them afloat.

As tempting as it

may be to explore these programs offering free stimulus money, you will

be wasting your money by signing up with one of these websites. There

is no money in the stimulus package for sending individual checks to

small business owners.

And contrary to what you may read, the government does

not secretly give away excess budget money to individuals in the form

of grants. There is no secret door with free money behind it.

Scam Sites about Scam Sites

So,

the scammers have figured out people are on to them. They are now

setting up websites that discuss government grant scam sites, and

promote a list of websites that claim to provide legitimate grant

information. Many of these sites are just fronts for scam sites.

Grant Information is Free

Government

agencies publish grant information on the web, and make it accessible

for free. You do not need to pay anyone to access grant

information. Grant information is

easily accessible by visiting agency websites, searching on your favorite

web search engine, or using one of these databases:

• Business.gov's Loans and Grants Search Engine

  provides legitimate small

  business loans and grant programs (when available) for which

  you might qualify. Currently, this tool contains mostly loan programs,

  but we are continuously updating it, and will add relevant grant

  programs as we identify them.

• Grants.gov

is database of federal grants, most of which are available to

non-profits, cooperatives, other government agencies, and academic

institutions. Grants.gov is the one-stop resource for finding grants

offered by federal

agencies. Some grant programs do allow eligible for-profit entities to

compete for grant money, however, these are highly specialized

programs, such as specialty crop research. However, you won't

find small business grants for starting a business, paying off debt or

otherwise help for running your business.

The Bottom Line

The bottom line is that

Federal and state agencies do not provide small business grants for

starting a business, paying off debt, or to cover operating expenses.

However, government agencies do provide guarantees on low-interest loans

for these purposes. You can use the Loans and Grants Search Engine to find programs for which you may be eligible.

For more information on government grants, visit the following resources:

• 'Free Government Grants' : Don't Take Them For Grant-ed (Federal Trade Commission)
• Government Grant Telemarketing Scams (Federal Trade Commission)
• Grant Companies Exploit Confusion over Stimulus Bill to Rip Off Consumers (Better Business Bureau)
• Government Grants Guide (Business.gov)

If you have paid money to a grant website, and feel you have been the victim of a scam, you can contact the Better Business Bureau and the Federal Trade Commission's Consumer Complaint page.