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Do Business Grants Have to be Repaid?

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Do business grants have to be repaid? The answer: 99% of the time, no, they don’t! There are many pros to funding your small business with grants, but the main one is that you’re essentially receiving free money with some small caveats. No matter if you took out a grant to fund a motorcycle fuel system business or a rainbow bagel bakery, you won’t need to pay the grantor back (aside from the 1% of the time that you do).
Most people mistake grants for loans - this is actually quite common, but it’s understandable. Unlike a loan, which a lender expects you to pay back (plus interest), grants are awards. Individuals, private organizations, and the government can all give out these awards. But don’t be misled - grants aren’t just free money that you can use as you please. They come with a very specific purpose, and that purpose can change depending on the source who gave it out. When a grantor provides funding, they normally require some sort of assurance that the grantee will use the money for its intended use. If the recipient is honest and transparent, they normally don’t need to repay the grant.

On a very rare occasion, you may find that, indeed, you have to pay back either a portion or the entirety of your grant. This typically only occurs if you received more money than you were supposed to or if you withdrew from your grant program early. You may also have to repay your grant if you didn’t fulfill all the obligations set by the grant maker.

As of now, the U.S. government is the largest grant provider. They offer over 1,000 grant programs. All major U.S. scholarships and grants are listed on their database, which is updated periodically. You can access their list here. You can find lists of private grants on a few different sources, such as the Foundation Center and Grant Watch.

Before you apply for a business grant, take time to put together a business plan. This is a normal requirement, and a grantor will most likely ask that you provide one. If you receive a grant, make sure you didn’t receive extra funds and that you follow its exact guidelines.

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