Federal money to start up a business is rare, but companies developing new energy technology, medical treatments and homeland security systems can apply for grants administered by state agencies. Private enterprises (such as the Chicagoland Entrepreneurial Center) and state universities also assist new business owners with obtaining grant money.
Misconceptions
Very few federal grants are available for someone starting her own company, unless she's operating a nonprofit. If a business qualifies, though, the 50 states receive federal dollars which they use for grants to increase the number of child-care centers, create energy-efficient technology, and develop tourism marketing programs.
For-profit entrepreneurs, however, can apply for U.S. Small Business Administration (SBA)-subsidized, low-interest loans.
Competition for the grants is fierce. The grants aren't always free; they often require the business owner to match funds or add the grant to other financing, such as a loan.
Foundations or government agencies provide money for charitable or social causes, which are typically given to organizations with non-profit tax status, or 501(c)(3). This disqualifies most start-up companies.
Research Dollars
A company may be eligible for a Small Business Innovative Research (SBIR) grant. To qualify, the business must have an innovative technology that a government agency seeks to develop with more research. The company needs qualified academic researchers and industry experts on staff. More information about these grants appears on the SBA Web site (see References).
Most states and some universities have entrepreneurship programs, wherein business owners can get information about financing. In Massachusetts, for instance, the Massachusetts Small Business Development Center informs owners about the free money and grant myths.
Enterprise Florida is another state agency, which has given federal grants to a firm developing a new cancer treatment, a printing technology developer, and a company creating global positioning systems (GPS) for unmanned vehicles.
University Partners
Universities nationwide can provide seed money, practical advice, or much-needed endorsements to start-up companies.
Small business development centers at the University of South Florida and Florida Atlantic University referred Guided Particle LLC and Microspherix to Enterprise Florida. The Gainesville Technology Enterprise Center, a local program that provides early-stage technology start-up companies with tools, training and facilities, also recommended Innovative Automation Technologies.
The subsidies are up to $3,000 and must be used for market research, proposal or grant writing, legal aid for patent filing and site visits to federal labs when vying for Small Business Innovation Research and Small Business Technology Transfer phase-one grants. The U.S. departments of Agriculture, Defense, Education, Energy, Homeland Security, Transportation and NASA, as well as the National Institutes of Health and the National Science Foundation, fund these grants.
Competition is fierce
"The competition for federal grants is extremely difficult, and for this reason it's vital for companies to fully understand the grant requirements before submitting an application," said John Adams Jr., president and CEO of Enterprise Florida. "Higher quality proposals result in a higher award rate."
Guided Particle produces printing technology for the printed electronics, biotechnology and materials development industries. The company is pursuing a phase-one grant for work with the Department of Defense's Defense Advanced Research Projects Agency. The St. Petersburg company develops advanced technology for remote interrogations and controlling biological systems.
Microspherix LLC is applying for a National Cancer Institute grant to create patented, bioplastic image-guided anticancer seeds which can deliver high doses of timed-release chemotherapy to tumors while sparing patients the typical side effects, said Ed Kaplan of Microspherix, based in Boca Raton. "The company has coined the term entotherapy for this new minimally invasive field of medicine."
The third business, Innovative Automation Technologies, makes GPS and integrated global positioning system inertial measurement unit, or IMU, orientation sensors and inertial sensors for unmanned vehicles and remote sensing applications. The company plans to perform autonomous aerial recovery of micro air vehicles, capitalizing on its micro air vehicle aerial deployment experiments and a miniaturized GPS/IMU sensor, the SmartIMU.
Private enterprise
In the 1990s, studies showed that 90% of Chicago-area businesses were small to mid-size firms, and that many needed mentoring and financial support to grow. Existing agencies had a narrow focus that didn't provide enough guidance for high-growth businesses.
In Chicago, the Chicagoland Entrepreneurial Center in 1999 partnered with the Chamber of Commerce to select the area's most promising entrepreneurs and help them build high-growth, sustainable companies. Since 2003, the center has helped entrepreneurs land $160 million and raise $105 million in financing. The Center has also awarded $1.2 million in grants, creating or keeping about 4,500 jobs.
One company the Center assisted was MagDrive, which creates electric generator/motor technologies to increase output from renewable sources, including wind, water, electric-hybrid and tidal energy.
Other sectors the Center assists are retail and consumer products, fashion and apparel, food and food services, clean technology, professional services and health care information technology.
The Chicago Center is funded via private corporations and individual, state and city grants, entrepreneurs, established businesses and academic institutions.
