Everybody I talk to about funding opportunities in rural development, small or large ag enterprise or renewable energy wants to know how they can get a grant. That’s great, because there is grant money out there, but the conversation starts with me turning that question around, often dashing hopes, and saying back to the prospect: “Are you sure?”.
That remark usually meets with confusion, and at times irritation, but it is a legitimate question. So, you think you want a grant, but do you know what you are asking for? In this next few posts (so check back to get the full series!) I’m going to define and explain many common funding terms potential applicants need to know these definitions and how to apply them to their own situation. Let’s start with:
What is a grant?
Grants are funds awarded that do not have to be repaid. Just because the money is ‘free’, doesn’t mean that it comes without constraints. In fact, many people avoid applying for grants because they don’t like the bureaucracy associated with asking someone for money. It’s true, there is no such thing as something for nothing. You will have to employ record keeping practices and provide regular reporting (the frequency depends on the agency and program) to prove to the grantor that you are compliant with program regulations and guidelines.
One other important factor to keep in mind is that grants are considered taxable income in most cases. Also your personal or business information that is submitted is probably accessible (check with the program guidelines) to the general public after a period of time per the Freedom of Information Act. If I’m writing your grant, I need to know as much as your business or personal finances as your accountant. If you get squemish talking money with strangers, grants might be tough for you to deal with.
Most grant programs also require matching funds. Matching funds are simply the dollars, that in addition to the grant, will be used to complete the project. Here is a key point to remember: you need to be solvent to apply for a grant. I say this because, sadly, many failing agribusinesses come to me hoping I can (for free) apply for a grant for them that will give them (free) money that will save their business. It doesn’t work like that-in either case. I charge for my services and grants require in most cases that you have enough money to contribute most of the cost needed to complete a project. Many grants also work on a reimbursement basis-so you have to spend your cash first then submit a receipt and record of the payment to the vendor before you receive a check in return.
So grants are cash, but they don’t bail out disasters and they don’t offer money without a few strings attached.On the next post we’ll review guaranteed loans.
To your prosperity!
-Sarah
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This is a great thing to point out, since unless you’re “in the business” it can be difficult to know the difference between grants, loans, service lease contracts (such as CRP, as one example), and the like. (Even in the business, it’s not always easy to differentiate.)
Good luck on the blog!