Receiving notification that you've won a business grant you didn't apply for may seem like a stroke of luck, but it's not. It's a scam.
Limited access to funds makes small business owners especially vulnerable to grant scams, according to Carolina Martinez, CEO of California-based microbusiness network Cameo. According to the Federal Reserve Bank's 2023 Small Business Credit Report, only about half of small business loan applicants are approved for the full amount they request. And to make matters worse, many of the grant scams are pretty convincing, with fake websites, operational call centers and persuasive representatives.
But there are some warning signs to watch out for. Business Subsidy You can avoid putting your business or personal finances at risk if the winnings are not legitimate.
1. I got a grant without applying.
“If you don't apply for a grant, you don't get it. If you don't apply, you don't get a grant,” says Hal Shelton, a certified mentor with SCORE, a nonprofit that offers free business mentoring. “If you're an individual or small business, keep track of what you've applied for and when. If it's not on the list, it doesn't exist,” Shelton says.
Martinez has some additional advice: If you apply for a grant through their official website, it's okay if they contact you, but “if you're contacted by an organization you've never heard of or have never applied for a grant from, it's likely a scam,” she says.
2. I was contacted through social media
How you receive your grant award notification can also tell you it's not legitimate. Scammers often use social media platforms, but Shelton says “the government doesn't use social media to contact individuals or businesses.” And while non-government agencies may announce grant winners on social media, you'll likely be notified personally based on the phone number or email address you provided when applying for the grant.
It's also important to check the email address on your grant award notification. If it's sent from a personal email account rather than your organization's, it may be a scam. If you contact them by phone, keep in mind that scammers may manipulate the information that appears on your caller ID to disguise an official number or agency name.
3. You are being asked to pay money to receive the grant
Grant scams typically involve people telling you that you're eligible for or have been awarded a grant and then asking for payment via cash, check, gift cards, cryptocurrency or wire transfer. With legitimate grants, “you get the money, but you don't pay to receive the grant,” Shelton says.
Small business subsidies provide funds that do not need to be repaid. This is a major feature of small business subsidies. Competitiveness.
4. There are no restrictions on how the grant can be used
Grants aren't usually free for anything. As Shelton explains, grant-giving agencies are usually mission-driven. “They're making grants to help other people fulfill their mission,” he says. Grantmakers usually explain how they'll use the funds. marketingpurchasing equipment, hiring new employees, etc.
This information, along with eligibility requirements and award deadlines, is usually provided when applying for a grant.
5. You will be asked to provide personal and financial information
“Be wary of people who ask for personal information or company financial information and who claim to be calling about grants and can't provide details about the call – these are telltale signs it's a scam,” Martinez says.
When applying for a grant, you will need to provide the necessary personal information, business details, etc. Business IdeaIf you are the legitimate transferor, they will have access to that information and will not request it from you again.
6. The grant will be awarded by a US funding agency
Fake federal agency names are often created in corporate grant scams. The Federal Grants Management Agency, the United States Grant Agency, and the Federal Grant Awarding Office are some examples of non-existent government agencies used in scams.
The best place to find a list of federal grants is Grants.govofficial government websites. Also, state, county, and city websites often list available local business grants on the pages of their designated economic development centers.
7. The grants are incredible
Applying the old adage “if it sounds too good to be true, it probably isn't” can help you discern whether a grant offer is actually a ploy to extract your personal information or money, Shelton says. Grants aren't awarded randomly, and the process is never easy. Anyone promising something different is likely a scammer.
However, there are legitimate organizations that help small business owners and entrepreneurs, such as the U.S. Small Business Administration's Small Business Development Centers, SCORE, and Community Development Financial Institutions.CDFIs).
“CDFIs, small business development centers, or other nonprofits that offer business coaching play an important role in helping entrepreneurs navigate the challenges of starting a business and also navigating grant opportunities that may be open to them,” Martinez says.
