‘Free money’ is never free; contact small business groups first

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.

City, state and government agencies offer help in small business funding, as well. The first stop when investigating any business offering funding is bbb.org.

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.
Advertisements

1 Comment

Filed under News You Can Trust

One response to “‘Free money’ is never free; contact small business groups first

  1. Mark Burrows

    The fact is, people have to understand that the word free, is simply disappearing in today’s economy. Let us be serious, it is almost extinct now. I will give a prime example. I both needed and wanted new eyeglasses. The last pair I bought, I got them out of desperation because the pair I had for years and loved broke. They were just a cheap fix in an emergency and just for near sighted as before I had progressive because I did not care for bifocals. Being the procrastinator that I am, I didn’t get around to getting descent glasses until today. I went to a highly recommended optometrist and eyewear center. Most places advertise free exam with purchase of glasses. This place did not. They charged for the doctor’s fee, they charged for the examination for glaucoma, and the even charged for the fitting for a trial pair of contact lenses that I wanted to try as an additional option to wearing eyeglasses which I periodically do. By the time I wrangled the price out for frames, thin progressive non reflective transition lenses with scratch resistance, including all fore mentioned fees, I forked out $945.30. Yet, you know what? I did not mind one bit simply because of the time they took, the professional courtesy, the detailed explanations, the prompt answers to all my questions, and the overall sense that I became part of something I felt was a comfort zone. No one tried to cheapen my experience there, I am aware I can get everything for less elsewhere, even online probably for half the price. Yet the worth of a comfort zone and the knowledge of the warranties I received are genuine manufacture and retailer service orientated because I paid for that privilege. The reality is straight forward, the word free in the world of business is not only in a sense an oxymoron, but it is merely a gimmick. Okay, want an example of an oxymoron, then try out free enterprise for size. So, what I am saying is this, the word free is a red flag that needs to be viewed with a great deal of scrutiny. Oh, and please do not reply to my message telling me I paid too much and got screwed. I only once took a shortcut for my eye health care, and it was a nuisance. I do not care much for regrets, but they are a learning experience therefore, I can park them away without bitterness and pull them out as pearls of wisdom and sage so I can pass them on to those who need a lesson in being attentive to caution.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s