MYTH: There is federal Grant money available for Small businesses.
FACT: The federal government does NOT provide grants for starting and expanding a business.
Government grants are funded by your tax dollars and therefore require very stringent compliance and reporting measures to ensure the money is well spent. As you can imagine, grants are not given away indiscriminately.
Grants from the federal government are only available to non-commercial organizations, such as non-profits and educational institutions in areas such as, medicine, education, scientific research and technology development. The federal government also provides grants to state and local governments to assist them with economic development.
MYTH: The Small Business Administration (SBA) make’s loans to small Businesses.
FACT: SBA does not make direct loans to small businesses. Rather, SBA sets the guidelines for loans, which are then made by its partners (lenders, community development organizations, and micro-lending institutions). The SBA guarantees that these loans will be repaid, thus eliminating some of the risk to the lending partners. So when a business applies for an SBA loan, it is actually applying for a commercial loan, structured according to SBA requirements with an SBA guaranty. SBA-guaranteed loans may not be made to a small business if the borrower has access to other financing on reasonable terms.
URBAN LEGEND: When dealing with the federal government procurement process you should first establish a working relationship with the government contracting officer.
FACT: Every Federal government activity has Small Business representative’s assigned. Their job is to help you in dealing with the federal government and to be your advocate. The contracting officer’s job is to oversee the process and ensure compliance with federal procurement regulations. Contacts prior to the posting/release of a solicitation should be through the Small Business representative. Contacts after posting/release should be through the Contract Specialist/Contracting Officer.
URBAN LEGEND: Women and Disabled Veterans are eligible for the SBA 8a program.
FACT: Being a Woman or a Disabled Veteran is not a basis to establish social disadvantage. Before SBA can approve an 8(a) Business Develop program application, the disadvantaged individual(s) must show that he or she is socially disadvantaged.
Under federal law, socially disadvantaged individuals are those who have been subjected to racial or ethnic prejudice or cultural bias within American society because of their identification as members of groups without regard to their individual qualities.
For purposes of the 8(a) Business Development program, the following individuals are presumed socially disadvantaged (called “presumed groups”):
- Black Americans
- Hispanic Americans
- Native Americans
- Asian Pacific Americans
- Subcontinent Asian American
Other individuals may similarly be found socially disadvantaged and eligible for the program on a case-by-case basis.
An individual who is not a member of one of the presumed groups can be admitted into the 8(a) Business Development program. To do so, the business must prove to SBA that the individual(s) meeting SBA’s ownership and control requirements is socially disadvantaged. This process includes showing personal experiences where applicable in education, employment, and business history.
The individual must provide evidence to SBA proving one’s individual social disadvantage. Evidence of individual social disadvantage must include:
- At least one objective distinguishing feature such as race, ethnic origin, gender, physical handicap, long-term residence in an environment isolated from the mainstream of American society, or other similar causes not common to individuals who are not socially disadvantaged.
- Personal experiences of substantial and chronic social disadvantage in American society, not in other countries.
- Negative impact on the individual’s entrance into the business world or advancement in the business world because of the stated disadvantage(s).
SCAMS: There are numerous unscrupulous, dishonest individuals that prey on small businesses in a variety of ways. Some examples of this are: Promising to look for a grant for you for a fee, while knowing that there are not any grants available. They cash your check right away, and send you a so sorry letter months later, stating that they looked but didn’t find a grant for you. The same tactic is used when preparing and submitting applications for getting you on a government General Services Agency Schedule (GSA). They take your check and cash it right away, knowing that you don’t meet the requirements to get on a GSA schedule; however they do prepare and submit the required paperwork. Several months later you receive the disapproval from GSA. The same scams are used for Business Plans, Marketing Plans, and Feasibility studies. To avoid these pitfalls Small Businesses must research the track records for companies/individuals they hire to do these types of tasks.
GOVERNMENT AGENCIES: With the exception of a nominal fee for workshops, Government sponsored activities such as Small Business Development Centers (SBDC’s), Veteran Business Outreach Centers (VBOC’s), Women’s Business Centers (WBC’s), Procurement Te
chnical Assistance Center’s (PTAC’s) and US Export Assistance Centers, offer no-cost consulting services by experienced consultants. In addition to those listed there are numerous local resources to assist Small Businesses. Small Business is the spark plug of the American economy and your success is our success.