How to avoid small-business grant scams

Getting a government grant for your small business is unlikely, so beware of scammers who try to convince you otherwise. Here are the three common tactics used to trick you.

According to the SBA (Small Business Administration), the federal government generally only provides grants to nonprofits, educational institutions, and state and local governments. So ads for government small business grants to any for-profit business that wants free money are probably scams. 

These are the three things, which the government will never do, that scammers use as common tactics to lure you into believing you’re eligible for a “government” grant.

1. They tell you you’ve won a grant

Scammers sometimes contact you to notify you they’ve awarded a grant you haven’t applied for and typically charge a processing fee to “claim” the supposed grant money.

The government never does that. You have to go through the application process if you want a chance at funding and they don’t charge a processing fee for it.

2. They contact you to promote the grant

If you receive a phone call, email, or letter telling you you’re eligible for a government grant, it’s a scam. Some private funders do contact organizations with requests for grant proposals, but the government never contacts business owners to encourage grant applications.

3. They ask you for money

Scammers tend to have one thing in common: They ask you for money to apply for a grant. Though some legitimate private organizations do this, the government never charges you for an application.

Who Can Get a Government Small Business Grant?

The SBA works with organizations to provide grants to eligible businesses and mostly provides loans and other kinds of support for small businesses that do scientific research and development. So, if you run this type of business, browse Grants.gov to find legitimate government grants for your organization.

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