You may have heard that there is free money out there to be given away to small business owners. This is not necessarily true-most small business owners obtain financing through loans and their own personal funds.

· The difference between a grant and a loan:
A grant is essentially "free money" that does not have to be paid back. A loan is "borrowed" money that will need to be repaid, often with interest. The government's grant program is very limited and described more below. The government's loan program is through the Small Business Administration (SBA). SBA loans are guarantee loans made through local lenders. For more information on SBA loans see our other publications.

While grants provide money that does not have to be repaid, they often require the recipient to provide matching funds. For example, you may need to come up with $10,000 before the grantor will give an additional $10,000.

· Are there any grants out there for your business?
Grants all have different requirements for eligibility. However, the majority of grants are given by foundations to groups of people who are looking for money to support a good cause. Examples may be: