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More About Grants and Scams

March 21, 2009

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.

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2 Comments leave one →
  1. Eduard Dawson permalink
    April 28, 2010 5:27 pm

    I’ve been reading up regarding the matter and have come across such horrible stories of how people lose money, time and investment thanks to these crooks. The nerve of these scammers to continue to charge you for the so-called good information or sell services -dissemination of information- for a fee. Information and access is free for all.

    Hah. Expect a crook indeed to try and cover his traces but in the end, they’re still a crook.

    Though, having fronts like that can make the task of figuring out if they’re real or not harder. They even go as far as to use the names of known entities and figures to pass of as legitimate.

    Eduard Dawson

    Grant Forums

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