What's the difference between government grants and government loans? The difference is that a loan has to be repaid (usually with interest), whereas a grant doesn't require repayment.

Does a government grant sound almost too good to be true?

Well, there's always a price to be paid and in the case of government grants the price consists of lots of research and paperwork.

Also, government grants for small business start-up and expansion are very limited. Generally such grants are available only for very specific and targeted endeavours, and your business proposal needs to fit perfectly within those guidelines.

For example, a grant program might be targeted to creating jobs in a particular industry (such as displaced forest workers), a particular geographic area (e.g. disaster-affected areas), a particular segment of the population (such as youth or aboriginals), or for a combination of these (e.g. jobs that hire youth in a particular industry in a disaster-affected area).

How to increase your chances of getting a government grant

Given the government’s tendency for acronyms, obscure definitions and bureaucratic jargon, figuring out exactly what the government agency is looking for in grant applications can sometimes be an exercise in frustration. But if you follow the guidelines in this article about how to increase your chances you may just get lucky.

I use the word "lucky" on purpose. Contrary to what many websites promoting proposal-writing and other fee-based services will tell you, getting a government grant for a for-profit business is not easy.

Isabel Isidro, Managing Editor of PowerHomeBiz.com agrees:

Even if you buy books on "how to get grants" or lists that supposedly have information on grants -- all of them are mere rehash of what CFDA has, albeit packaged differently. But still the info is the same - hardly any grants for starting a for profit business.

Like me, Ms. Isidro recommends sticking with government websites to get your information:

...go to the Catalog of Federal Domestic Assistance (CFDA) and Grants.gov, which are two sites created by the federal government to provide information on grants. Browse through the listings and see if you can find any grant that would support a for-profit venture.

Be aware that the Small Business Administration does not give out grants to start or expand small businesses, although they do offer a wide variety of loan programs. They explain their policy on grants here.

This article is for information purposes only and should not be construed as financial or legal advice.