Continued from part one.
New businesses don’t (shouldn’t) want a federal grant.
Never mentioned by those pushing the myth of federal grants to start new businesses are the regulations a business owner would need to follow after accepting a grant.
When organizations accept federal grants, they also accept the rules and regulations associated with those funds. The federal government doesn’t simply give away money and tell recipients, “go do stuff.” Not so fast. Granting agencies like to keep a close eye on grantees-especially new grantees.
Let’s assume federal grants exist to start new businesses (we know they don’t but play along). Further assume an individual’s grant application scores high enough to get past the first round of screening—beating out thousands of other proposals. The applicant then enters the second review phase—the pre-award assessment—where a granting agency staff member looks at the new business’ internal controls and its ability to manage a federal award. An applicant making it past this phase would be assigned a federal program officer to discuss their awarded proposal and to review their business goals, implementation/rollout timeline, budget, how progress will be evaluated, how the business will be sustained after the grant is over, etc.
Next, the program officer will outline the federal regulations, assurances and national policy requirements the business owner needs to follow. The owner will also receive instruction on how to access the funds. (Grant recipients don’t receive all their funds at once; they receive the money over time as they need it.)
After that, the owner will learn about the bi-monthly check-in calls with his/her program officer to discuss how business is going; the quarterly or annual progress reports to be submitted to the federal government; the on-site monitoring visits from the program officer; and the audit requirements (grantees can be audited at any time, including up to three years after the grant is closed). Also keep in mind if a program officer or an auditor disallows any of the business owner’s expenses, that money would need to be repaid to the federal government—with interest.
Even if government grants existed to start businesses, the owners shouldn’t want them because of too many strings attached and too much oversight. New business owners struggle enough with landing new customers, making payroll, finding suppliers, etc. The last thing they need is a program officer in Washington, DC watching over their shoulders, monitoring progress and threatening to withhold funds if the business doesn’t achieve its goals according to a best case scenario business plan.