Using a Business Government Grant

Using a business government grant helps provide an additional funding source for a business to meet its growth needs. Government grants for business come in many forms, including grants for business start-up, development, plants, machinery and equipment and can be made by the federal, state or local government. The qualifications for these grants vary, depending on the agency or department making the grants available and can be used to meet a variety of needs.

Business Grants versus Loans

The advantages of a business government grant over a business government loan is that grants do not have to be paid back. Government grant programs are seen as incentive based used to meet desired economic development goals for a municipality, county, state or even the federal government. These targeted programs come from HUD, USDA, SBA as well as a state’s economic and workforce development departments and the various local economic incentive programs.

Grant Size and Purposes

The size of the grants can range from $1,000 or less upwards to several hundreds of thousands.  Their use can be for façade replacement of a storefront in a targeted economic development zone, infrastructure repairs for a plant or factory operating in an industrial park and other purposes. The limitation as to how the grant can be used is set by the agency or department making the grant and varies by purpose. As long as the business meets the requirements of the grant program as described in the grant application, the money should be available to assist the business. 

Proper Use of a Business Government Grant

It is important for a business to use the grant dollars in the manner prescribed by the program.  Every business government grant program requires some form of documentation that has to be turned in annually, in order to ensure compliance with the grant requirements. A business may also be subject to inspection or audit to determine if the funds are being used properly and to initiate any corrective or disciplinary actions in the case where fraud or abuse is present.  

Misusing government grant dollars for purposes other than what is provided for in the grant documents may subject the business to fines, civil and criminal penalties. To avoid any appearance of impropriety a business should segregate these funds and only make expenditures that are consistent with the business government grant’s guidelines.