By Robb Hicken/BBB’s chief storyteller
Maria Malano (not her real name) came to the United States under all the normal – if you can call being a political refugee normal – ways.
Once she arrived in Boise, her priority was to make a living. Overcoming the typical barriers, she set out to set up a sewing/alteration business. This was something she had learned in her home country of Bosnia.
Short on start-up money, she went online. The company she’d contacted was found on the Internet. Malano contacted the Summit Business Consultants in Las Vegas, Nevada. Better Business Bureau issued an “F” rating for Summit Business Consultants.
Next, she contacted the Small Business Development Center to see if there was more she could be doing.
“She’d received approval for a $203,000 grant,” says Betti Newburn, with SBDC located on Boise State University’s campus, who began working with Malano. “They were going to charge her between $5,000 and $6,000 to complete the grant application and business plan – depending on the number of hours required.”
Newburn says Malano had talked to four to five Summit “consultants,” all on different phone numbers. Most consultants simply answered “hello” as opposed to stating the company name, as is customary, Newburn says.
“My investigation created many ‘red flags,’” she says. “Needless to say, we were able to protect our client and refer her to legitimate sources of possible funding.”
BBB says be wary of online searches for grants, loans and “free money.” Solicitations – email or mail – offer claims that “foundations can be a better source for finance than banks” and “anyone can get an interest-free cash grant.” Responding to such postings or email solicitations generally ask for an upfront application fee of $20 to $50, and a promise to match the applicant with a suitable private foundation. Or, they may promise to offer a list of available grants.
Ron Berning, program director for META, says Malano is a great candidate to work with the META program. META (MicroEnterprise Training & Assistance) is a Boise-based nonprofit that specializes in the support needed to launch and grow local businesses through our microloan funds, one-on-one consulting, and business plan training courses.
“We don’t only help refugees, but all small businesses that are looking for initial funding,” says Berning.
Newburn says, “I am glad she came to SBDC before writing a check, but I assume others get taken or [shady grant businesses] would not continue.”
BBB offers this:
- Watch out for phrases like “free grant money.” Grants do not have to be repaid; thus there is no need to use the word “free.”
- Organizations do not usually give out grants for personal debt consolidation, or to pay for other personal needs.
- Grants are usually given only to serve a social good, such as bringing jobs to an area, training under-employed youth, preserving a bit of history, etc.
- Always remember to check out any company you plan to do business with by contacting Better Business Bureau (BBB). Also check with a regional or state economic development office to see if they know of grant programs for which you might qualify.
- Visit your public library. Ask a librarian to help you find reference books describing foundations and the criteria they use in awarding grants.
- Be wary if you are asked to give money up-front to an unknown company before the company will give the promised services.