Using Government Funding Towards your Small Business Startup

Getting your new business off the ground can be quite challenging. In most cases, entrepreneurs lack the necessary capital or qualifications to seek capital from established private sources such as banks and venture capitalists. However, it is worth noting that you can still get the necessary funding to start a business by taking advantage of government funding programs.

In a bid to help small businesses that are usually unable to secure funding from traditional sources, the government provides different types of funding programs.

Read on to find out how you can turn to government funding to finance your startup.

Grants and Loans

The government offers entrepreneurs access to funding for their new businesses through the provision of loans and grants. Qualifying businesses get the opportunity to access government backed loans from traditional lenders. Entrepreneurs looking to start small businesses are usually seen as being quite risky by traditional lenders and financiers. This is the main reason why they are mostly turned down when applying for funding.

The government however offers to guarantee loans offered to entrepreneurs by private lenders. The main idea here is to reduce the risk exposure these lenders would otherwise have to deal with when lending an entrepreneur without such a guarantee.

Research local, or federal government grant and loans programs available to your when seeking to take advantage of this source of funding.

Community Development Initiatives

To uplift low income communities in various parts of the country, the government provides funding for entrepreneurs through community development initiatives. Designated local financial and lending institutions usually have the responsibility of loaning out government funds to qualifying entrepreneurs. It is worth noting that this type of government financing differs from the one described above as government funds are used in this case.

It is worth noting that different parts of the country have varying concentrations of financial entities offering funds for community development initiatives. As such, it is recommended that you research your area first.

Tax Credits

Business funding comes in different forms. Tax credits provide another useful government funding option available to entrepreneurs. Here, the government provides businesses with tax credits for a variety of qualifying expenditures. The tax credit awarded can be claimed over a given number of years, saving the business a huge amount of cash which can be used to fund other operations for growth.

Entrepreneurs and small business owners can look to these government funding options to meet their financing needs.