When you’re a small business, cash is king. But you know what’s even bigger and better than cash? Free cash! However, unless you’re a trust fund baby or lucky enough to win the lottery (A bad investment BTW), then free cash is hard to come by. Aside from the two previously mentioned methods or a rich uncle, your main option for free cash is small business grants.

Don’t get too excited yet though

Small business grants have their pros and cons. Free money is usually a good thing, but just keep in mind, there are some hang-ups that come along with “free” stuff. So, before you decide this is the best funding option for your small business let’s take a closer look.

First, what is a small business grant anyway?

Think of a grant like a scholarship for small businesses. They usually come from federal, state, county or local governments, but sometimes private businesses or corporations will offer them as well. Just like a scholarship, there are a bunch out there, and they are usually set aside for “people” that meet certain criteria. Some are for online companies, some are for veterans, others for women and/or minority owned businesses. The list goes on and on, and they all have different application requirements.

Here’s the key to getting a small business grant.

It all comes down to research. There are thousands of grants available out there, but your chances of getting one really come down to two things: How much work will you put into finding one that you qualify for, and how much work are you willing to put in throughout the application process. Are you seeing a theme here?

Let’s get you up to speed on the process.

A good place to start is the Small Business Administration website at www.sba.gov. This is where you’ll find a lot of helpful information to start your search. Our best advice is to save it to your favorites and just explore the site. There is a lot of information to consume.

Next, try going to www.grants.gov. It’s a federal website as well that lets you search for available government grants. Just make sure you ensure you’re eligible for a grant before you spend too much time applying.

Last, it’s a good idea to check your state’s official web page. A lot of states offer not only grants to small businesses, but also tax incentives and other economic incentives for you to bring jobs to the state.

Now let’s talk about what you need to know as you begin your hunt for free money! And to be totally honest, some of these factors may outweigh the benefits of free money. So, to ensure you’re going into this with your eyes wide open, let’s begin.

1. Small business grants take A LOT of you and your staff’s time!

Like most government processes, getting a federal or even local government grant is very time consuming. It’s important to understand how much your time is worth, and then evaluate how much you’re getting vs. how much time it’s going to take to get the money. There’s a lot of paperwork and there’s a lot of required documentation/market reports/demographic reports/etc that will have your staff jumping through hoops. Just make sure it’s all worth it before you dedicate all that time – time you could be spending on your own growth strategy or business development

2. Don’t expect the money any time soon.

As we just mentioned in the first section, remember this is the government we’re dealing with here. Don’t expect things to move quickly. Once you submit your application, it can take weeks, or even months before you get a response or find out if you’re approved. Yes, it’s frustrating, but if you understand that’s part of the game, you won’t lose as much sleep over it.

3. The competition for small business grants is stiff!

This is FREE money we’re talking about here. You won’t be the only one applying. The brightest and the best will have their teams working to get this money, so be ready for fierce competition. The key is to know your strengths, and know how you can present your business in the best light possible. Show them why you deserve it more than anyone else! And another thing… make sure you’re applying for grants that fit your strengths as a company. That will significantly improve your chances.

4. Grants come with strings attached.

If you are lucky enough to be one of the few grant recipients, remember this usually comes with strings. Be ready to sacrifice a little privacy and understand you’ll have to do a little better job of keeping your “house in order”. Many grant issuers like to check in on your progress. This often means monthly or quarterly “check ins” where they will ask for proof that you’re meeting the requirements as outlined in your grant. Also, there can be other strings such as contingency agreements. I.E. State and local programs will give you the money contingent on matching funds or a loan to supplement the grant.

5. Small business grants may not be the money you want.

Grants usually come with rules on what you can use the money for. If you think it’s a get out of debt free card, think again. Federal and state grants are funded with taxpayer dollars so they do their best to ensure it’s used for purposes that will benefit the community as a whole, and not just to pay down debt for your business. (They want more jobs, improved technology, etc.) It’s not a loan. It’s generally a gift for a specific purpose.

Wrapping it all up.

Small business grants can be incredible opportunities for your business, but they can also be money pits that don’t have the ROI you imagined when you heard the word “FREE MONEY!” To determine if they are right for your business, do some research and keep all these factors in mind. Now that you’re informed, you’ll make the right decision!