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Beware of Small Business Grant Scams

Three people were arrested in Las Vegas recently for scamming 400 people across the country on a small business grant scam. Investigation by the U.S. Secret Service and the FBI led to arrests and indictments against the three for the $5 million grant funding telemarketing scheme.

The scheme was carried out by company representatives who called small business owners and promised them grants if they paid a fee. They even had web sites for their businesses about obtaining grants, but they had no intention of issuing any grants. They merely collected the fees and ran. The recent event should cause all small business owners to reflect on how to identify proper sources for business grants.

The first red light should have been the fee. Legitimate companies who offer grants do not charge a fee for their service. The second red light should have been the promise of government or private grants. Government grants for small businesses are rare, and those that do exist and are legitimate are located through the U.S. Small Business Administration (SBA). Small business owners who qualify should only look at this official web site for information. Private grants are offered directly through the agencies providing the grants, and no fee is charged to apply for a grant.

Any small business owner who finds a company that offers grants should do the following:
  • Investigate the company thoroughly through the Better Business Bureau
  • Check to see if the company is licensed
  • Beware of grant assistance companies who charge up-front fees for the promise of grant money
  • Don't sign any contracts without having your attorney review them



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