A government grant to a company can make the difference between a competitive and a non-competitive project. Government grants are generally targeted to sectors and industries, although there are different types of grants to consider.
First of all, we have to know that there are two main groups of grants:
- Those that are maintained over time ( although they may vary in amounts on an annual basis).
- Special grants that may be motivated to promote a sector, deal with a special situation, etc.
What a government grant to companies in the US looks like
It is important to be aware of the difference between government grants and other types of grants from the State, such as local authorities, etc. This is a relevant aspect because in some cases, these grants can be combined, but in others, they cannot, so it is necessary to carefully review the proposals before applying for them.
By definition, a government grant is an aid that can take the form of cash income or subsidized loans offered by the government to companies. The aid depends on factors such as:
- The sector
- Annual budgets
- The type and size of the Company
In addition, it should be taken into account that a grant can differ and even encompass other aspects such as tax benefits, which, although not directly financial benefits, can be considered as such.
Types of government grants to companies in the U.S.
Among the types of government grants to support companies, the following are the most common in the U.S.:
- Direct grants: these are cash payments made into companies’ accounts.
- Subsidized loans: this type of grant reduces the cost of loans by subsidizing the application of interest. This allows the company to access cheaper financing.
- Risk support: this is a subsidy model in which the government lends itself as a guarantee against risk examinations (e.g. as a guarantee for financing).
- Better contracting actions: Although is less common, this is another form of subsidy. In this case, public procurement is offered at higher price than the free-market in order to favor the beneficiary companies and help them grow.
In addition to the above, we can also find shock actions such as the purchase of shares in a company to keep it competitive in the market.
How could we access a grant for companies?
There is no single way to access a business grant. Although these are government grants, in many cases they can be processed in a local or federal system.
The general rules for this type of aids are well known. Business consulting firms usually have the necessary data to be able to know which is the most suitable for each sector.