Don't Buy It! There is No Free Money!!!

You've heard it a million times, but it still applies.

If something sounds too good to be true, it probably is.

The late-night infomercials on television and radio try to convince you otherwise. If you need to pay off your personal debts, want to start a small business or seek cash to sell your invention, the government has free money for you!

But it doesn't. It's a scam, and even though they tell you it's not a scam, it is.

"There are no government grants for the purposes these telemarketers describe," says Mary Paulsell, assistant director of the University of Missouri's business development programs.

Grants are usually made by government agencies for non-profit foundations. Very seldom are they intended to fund for-profit enterprises like a small business or to allow an individual to pay off personal debts. The grants that are available for small companies tend to be focused on very specific purposes, such as providing childcare or working with disadvantaged children. Grants of that type may not be used for general business operating purposes.

"A great deal of misinformation exists in the marketplace regarding the availability of money to start companies, expand existing firms or pay off debt," says Paulsell.

"The reality is that the majority of capital available to the small business sector comes through loans. Some of those can be negotiated at a reasonable rate, and some require a guarantee. But 'free money' for small businesses or to pay debts is virtually non-existent."

The few grants available to small businesses from government agencies are specifically designed to help the agency granting the funds meet its goals. For instance, the Small Business Innovation Research (SBIR) program does make grants to high-technology companies to conduct individualized research that will benefit the agency. A grant proposal is necessary, and the program is highly competitive. Only a few companies may actually qualify for this type of assistance.

"Unfortunately, there are some individuals and companies who take advantage of small business owners by selling them books and directories supposedly listing a myriad of grant programs for entrepreneurs," Paulsell says. "For $50 or $75, business owners are promised a comprehensive list of sources for 'free money.' Our business development counselors often have to spend a great deal of time convincing folks that the claims are untrue.

"We can't offer you free money, but we can offer you technical assistance, counseling and other educational resources without a fee. We can help you prepare to access capital through other avenues. You will need to prepare a business plan and demonstrate that you have a good understanding of finances and the other factors affecting your company. But we can work with you on that, and in the end, you will have a healthier business."

There are many conventional business loans available as well as special loan programs through the U. S. Small Business Administration. The business development counselors available through the University's Missouri Small Business Development Centers can assist in preparing applications and other documentation to apply for those loans.

Don't fall prey to the advertising that promises you something for virtually nothing. Save your money, and invest it wisely in your growing business!

For more information on legitimate financial assistance for small business, you can find the center nearest you at www.missouribusiness.net or by calling 573/884-1555.

If you feel you have been scammed, you can report it to the Missouri Attorney General's office by calling the Consumer Protection Hotline at 1-800-3920-8222, emailing to ag@ago.mo.gov, visiting the website at www.ago.mo.gov/consumercomplaint.htm or writing to:

Attorney General's Office
Consumer Protection Division
PO Box 899
Jefferson City, MO 65102