Is there really free money for small businesses?

Yes, but less than the ads suggest. Real grant money for businesses comes mainly from state and local economic development programs, federal research grants like SBIR and STTR, and privately funded contests run by corporations and foundations. All of it is competitive, tied to a purpose, and applied for. Nobody hands it out because you clicked an ad or answered a message.

Does the government give free money to start a business?

Not in the way most people mean. The SBA states plainly that it does not provide grants for starting and expanding a business. Its grants go to nonprofits, resource partners and educational organizations that deliver counseling and training, plus narrow programs such as SBIR and STTR for research and development. Some state and local governments do run business grants, usually for a specific purpose like a storefront improvement or hiring in a target area.

How can I tell if a business grant offer is a scam?

The FTC's warning signs: you were contacted out of the blue by phone, email, text or social media about a grant you never applied for; you are asked for your Social Security number to see if you qualify or your bank account number to deposit the money; you are told to pay a processing or other fee, especially by gift card, wire, cash or cryptocurrency; or someone guarantees you will get a grant. Government agencies will not contact you about a grant you did not apply for, and they will not demand payment to give you one.

Do I have to pay a fee to get a government grant?

No. The FTC says government agencies that award grants will not demand that you pay to get a grant, and grants.gov, the official place to search federal grants, is free. Some small privately funded contests charge a modest, clearly disclosed application fee, which is a different thing. A fee to release or process money you have supposedly already won is a scam.

Can a grant consultant guarantee I'll get funding?

No honest one will. The FTC's advice is that honest businesses will never guarantee that your business will get a grant or loan, and any company making that promise is a scam. In 2022 the FTC and Florida's attorney general sued a grant-writing outfit called Grant Bae that allegedly told minority-owned businesses they were guaranteed at least $25,000 in grants if they paid for its services.

Is grant money taxable?

Usually. The IRS has stated that the receipt of a government grant by a business generally is not excluded from the business's gross income and is therefore taxable. Business expenses you pay with the money are often deductible under the normal rules, so the net effect varies. Ask your accountant what to set aside before you spend an award.

What should I do if I already paid a grant scammer?

Contact your bank, card issuer or payment app right away and ask them to reverse or stop the payment, then report the scam to the FTC at ReportFraud.ftc.gov. If the scammer used the SBA's name, you can also report it to the SBA's Office of Inspector General. Then stop responding to the scammer.

Free Money for Your Business: What's Real and What's a Scam

Set Your Expectations First

Search "free money for business" and you get two kinds of results: a handful of real programs with rules, deadlines and long odds, and a much larger pile of pitches promising that thousands of dollars are waiting for you if you just confirm a few details. The second pile is louder because it does not have to tell the truth.

Here is the honest version. Free money for a business, meaning money you never repay, almost always means a grant. Grants are awarded to applicants who asked, for a specific purpose, against competition. Nobody sends you one because you liked a post. Nobody guarantees you one in exchange for a fee. And the largest name people associate with small business money, the SBA, says on its own grants page that it does not provide grants for starting and expanding a business.

That does not mean the money is fake. It means you have to know where it actually lives.

Where Real Free Money Actually Comes From

Almost every legitimate source falls into one of four buckets. If an offer does not fit one of them, slow down.

1 · State and local programs

The best odds most owners never look at

State commerce departments, city economic development offices and downtown organizations run the bulk of real business grants. They are usually tied to something concrete: fixing up a storefront, opening in a target neighborhood, creating jobs, buying a building. Many are reimbursement-based or require a match, and the windows can be short. Because they are posted on municipal web pages rather than advertised, the applicant pools are often small. Start with our grants by state directory and then check your own city's economic development page.

2 · Federal research grants

SBIR and STTR, if you build something new

The federal programs that genuinely put grant money into for-profit small businesses are the Small Business Innovation Research and Small Business Technology Transfer programs, which the SBA lists alongside a manufacturing grant (Empower to Grow) and the State Trade Expansion Program for exporting, which runs through state entities. SBIR and STTR fund research and development with a real technical question attached, not working capital for an existing shop. If that is you, read our SBIR/STTR guide. If it is not, federal grants are mostly not your lane.

3 · Corporate and foundation contests

Real, competitive, and constantly rotating

Companies and foundations run grant contests as marketing and philanthropy. Verizon's Small Business Digital Ready program is a good example of how the legitimate ones work: the program is free to join, and Verizon says $15 million in small business grants have been awarded through it since 2021. Contests like these open and close on their own calendars, typically pick a small number of winners, and want an application that tells a clear story. Our monthly grants open now roundup tracks the ones we can verify are currently accepting applications.

4 · Free help instead of free cash

SCORE and SBDCs

The SBA's grant money mostly funds people who help you, not you directly. SCORE, an SBA resource partner and nonprofit, says its mentoring is always free no matter how many times you meet, though some workshops and courses carry fees. Small Business Development Centers, funded in part through cooperative agreements with the SBA and often based at universities, offer one-on-one consulting at no cost. Neither will hand you a check, but an SBDC advisor who knows your local programs is often the shortest path to the grants in bucket one.

One more category deserves a footnote: programs that are called grants but are really forgivable loans, reimbursements or matching awards. They are legitimate and often worth it, but they do not behave like a check in the mail. We cover the differences in do you have to pay back a small business grant.

The FTC's Warning Signs of a Grant Scam

In a March 2026 consumer alert, the Federal Trade Commission laid out the pattern behind fake government grant offers. If you see any one of these, treat it as a scam until proven otherwise:

You were contacted out of the blue. A call, email, text or social media message says you qualify for free government money. The FTC is direct: government agencies won't contact you by phone, text, social media or email about a grant you didn't apply for.
They want your Social Security number "to see if you qualify." Eligibility checks do not start with your SSN in a chat window.
They want your bank account number "to deposit the grant." That number is what they plan to use against you.
There is a fee. A processing fee, a release fee, a tax fee. The FTC says agencies that award grants will not demand that you pay to get a grant, and asks for payment by cash, gift card, wire transfer or cryptocurrency are a further red flag.
The money is for personal bills. The FTC notes government grants are not awarded for personal needs like debt, rent or home repairs. A pitch that blends "business grant" with "pay your bills" is fishing.

Business owners get a specific variant. The FTC has warned about Facebook messages telling owners they are eligible for, or have already won, a business grant, sometimes spoofed to look like they came from a friend. Some ask you to text a number to "confirm" the grant. Some ask for your passwords. If the only way to talk to the person offering the grant is through social media or text, that alone is a red flag.

The same playbook now borrows trusted logos. Small Business Development Center offices have warned owners about emails using SBDC and SBA branding that congratulate you on a grant approval and then ask you to confirm your banking details. SBDCs do not issue SBA grants.

The "Guaranteed Grant" Consultant

The most expensive version of the scam does not pretend to be the government. It sells you access. In June 2022 the FTC and Florida's attorney general sued a grant-writing service called Grant Bae, alleging it told minority-owned businesses they were guaranteed at least $25,000 in grant funding if they paid for its services, with a $6,999 "Elite" package that supposedly came with at least $250,000. According to the complaint, customers saw portal messages that their grants had been "awarded" or were "pending," and the money never arrived. A federal court temporarily shut the operation down and froze the defendants' assets.

The FTC's takeaway from that case is the single most useful rule on this page: honest businesses will never guarantee that your business will get a grant or loan. A legitimate grant writer charges for their time and tells you the odds. They do not promise an outcome, because nobody controls the outcome but the funder.

What Legitimate Programs Never Ask For

A fee to release money you already won. Real awards do not have an unlock charge.
Payment by gift card, wire or cryptocurrency. No grant program on earth needs Apple cards.
Your online banking password or any account login.
Secrecy or urgency: "act in 24 hours," "don't tell your bank."
Money for a list. The official place to search every federal grant is grants.gov, and it is free.

One honest nuance: some small privately funded contests do charge a modest application fee, disclosed up front, before you apply. That is a business model you can take or leave. It is not the same as being told you have won and must pay to collect. Real programs also have a public web page on their own domain, a named organization behind them, published rules, and a way to reach a person who is not in your DMs.

Yes, Real Grant Money Is Usually Taxable

Even the legitimate kind is not entirely free. The IRS has stated that the receipt of a government grant by a business generally is not excluded from the business's gross income and is therefore taxable. Expenses you pay with the money are often deductible under the normal rules, so the net hit depends on how you spend it and when. We are not your accountant, so ask yours what to set aside before you plan the spending.

If You Already Paid

Move fast. Call your bank, card issuer or payment app and ask them to stop or reverse the payment. Report the scam to the FTC at ReportFraud.ftc.gov, and if the scammer used the SBA's name, report it to the SBA's Office of Inspector General as well. Then stop replying. Every additional message is another chance for them to invent a new fee.

Where to Go From Here

If you are new to this, Small Business Grants 101 covers the basics, and our guide to the easiest grants to actually get shows where the realistic odds are. The short version: local beats national, specific beats generic, and anything that finds you first deserves suspicion.

Need Capital Before a Grant Comes Through?

Real grants are worth chasing, but they run on the funder's calendar, not yours, and most applicants get nothing. If payroll, inventory or an opportunity will not wait months for a decision, working capital funding can bridge the gap while your applications are pending, from a lender you contact, on terms you can read before you sign.

See What Funding You Qualify For