As a small or mid-sized business owner, you’re always open to viable sources of business funding that help you “spend money to make money”. After all, many things in the business world can change, but that principle remains as true today as it has for centuries. It’s a guiding principal of business survival and success.
With this in mind, you may be considering applying for grants, such as those offered by nonprofit organizations, business associations, and corporations (typically through a special division that has its own community-building mandate). At first glance, this seems like a sensible and strategic option. After all, grants are interest free, and that’s certainly a nice feature.
However, the key thing to keep in mind – so you avoid wasting an excessive amount of time writing proposals and attending meetings with potential sources of funding – is that a grant is not the same as a working capital loan.
Here are the key aspects that make a grant a categorically different funding option:
- The grant application process is usually very long, and typically takes months. It’s also very competitive, as hundreds and often thousands of businesses compete for a limited pool of funds.
- Grants are not loans, in the sense that the funds can only be used for a specific purpose – such as hiring employees with disabilities, switching over to “Green Tech”, and so on. While these are certainly noble and worthwhile investments, some business owners are surprised to discover that there are many strings attached to the funds.
- Even when used for a specific purpose (such as those noted above), the spending of grant dollars typically must be carefully, meticulously itemized and available for review and audit by funders. While there is nothing wrong with this requirement from a compliance and governance perspective, it places an excessive administrative burden on recipients. This is one reason why nonprofits that annually rely on grants often have specialized staff to handle this aspect.
- Grants are not ongoing sources of business funding. There should not no expectation that they’ll be available again in the future. In fact, a business may actually be excluded from re-applying, so as to ensure that other applicants have access to funds in future years.
- Businesses that are awarded grants are usually featured on websites and in other promotional/marketing material. While this may not be a problem for some businesses, it could be an issue for others that prefer to keep a lower profile.
The Benefits of a Working Capital Loan
On the other side of this spectrum – the one that is categorically more flexible and fluid – is a working capital loan. That’s because:
- The application process is rapid and approval rates are high.
- Funds can be used for any purpose whatsoever.
- There is no requirement to provide invoices or justify expenses.
- It’s possible to take out a second loan while the first is still in effect.
What’s more, unlike grants that are usually one-offs (provided that they can be obtained in the first place, which is by no means a foregone conclusion), many businesses get several working capital loans over the years. In fact, here at Mulligan Funding, we’re proud to note that some customers on our roster have received dozens of working capital loans. We’re their “go to” business financing partner.
The Bottom Line
If you have easy access to a grant opportunity, then by all means: go for it! It could certainly help your business move forward.
However, if you’re too busy running your business and don’t want to endure what will likely be a costly and time consuming process with very little chance of success, then we invite you to call Mulligan Funding at 855-326-3564 to discuss your financing options today!
*The information shared is intended to be used for informational purposes only and you should independently research and verify.
Note: Prior to January 22, 2020, Mulligan Funding operated solely as a direct lender, originating all of its own loans and Merchant Cash Advance contracts. From that date onwards, the majority of funding offered by Mulligan Funding will be by Loans originated by FinWise Bank, a Utah-chartered Bank, pursuant to a Loan Program conducted jointly by Mulligan Funding and FinWise Bank.