After self-publishing and launching my first book Wanderlust Musings, I soon learned that everything comes with a price. I soon learned what having to spend money to make money meant, but the only problem was that I didn’t have any money to spend, so how was I going to make money? I had this book, that required me to do my own footwork in terms of sales, marketing and promotions, but here I was working a part time job making closed to nothing just to pay rent and other important expenses. You can imagine the dilemma I found myself in when being asked to do book readings and vending at events. How am I going to afford to buy my book in bulk off my salary? So I had the bright idea to think outside the box and do my research on small business loans and small business grants. As an entrepreneur building a brand, there are several banks and private loan services that offer federal loan programs and grants for small business owners, however before applying, it is important to know the differences between the two, the pros and cons and which is right for you.
Many small business owners think of grants as “free money” and for some it is, but in most cases grants for for-profit organizations rarely exist. It is important to note that many small business grants are limited to non-profits, educational organizations and associations. Grants are not available for starting a business, paying off debts, or covering operating expenses for companies that are for-profit.
The federal government itself does not provide loans to small businesses, however, it does provide a guaranty to banks and lenders for money lent. This reduces risk factors for banks and provide private loans to small business owners who don’t qualify for traditional loans. With loans as well, it is borrowed money that you will be required to repay plus interest.
The most common that many small business owners use are Small Business Administration (SBA) loans which are commonly used for starting and expanding businesses. Some loan basics you should know:
Knowing the difference between loans and grants and your business’s eligibility for them can help you put into fruition that start up you’ve been planning or the non-profit organization that you’ve always wanted to start in your community. It is important to do your research on a state and federal level as the requirements and application processes can vary on a state to state basis which in turn can be completely different from the federal process.