Government Grants for Debt Relief
Are They Real?
The notion that government grants for debt relief exist seems to be perpetuated by certain misleading television commercials. However, this is not altogether true because while the government does issue grants, these grants are not specifically meant for debt relief and can't really be considered one of your viable debt relief options.
Businesses which claim to have knowledge of where to find this "free government money" will ask you to pay for access to this knowledge. This is when you will find that their pitch is ambiguous at best but, unfortunately, not illegal.
A grant is not an entitlement like social security. It is a cash award given by the federal government to allow someone to perform a specific task that in some way contributes to society and/or the government.
Examples of categories and projects which are often issued government grants are:
- Arts/Humanities
- Community development
- Education
- Health
- Legal services
- Science and technology research
- Social Services
- Small Business Start-Up
- Non-Profit organizations
Although grants are generally made in large amounts of money and do not have to be paid back, they should not be thought of as government grants for debt relief. The majority of federal grants are given to organizations or local governments that have specific projects planned which need federal funding.
An example of these type of project where federal funds supplied might be supplied to a state agency would be to a run retraining programs for displaced workers. Federal money supplied to cities and municipalities may fund research into local water quality, or renovation of a depressed neighborhood, or road paving projects.
When an organization or group of individuals affiliated with a certain institution is issued a grant, they must adhere to strict regulations concerning how they use the money and what sort of results will occur from utilizing the money. This is where writing a documented and well prepared grant proposal becomes extremely important. Details listed in the proposal will have a profound impact on whether or not the grant money is awarded.
If the federal government officials review a grant proposal and do not think it will be successful or they believe the need simply does not exist, they will reject the grant proposal. Good professional grant writers are, therefore, highly desirable and sought after by organizations routinely seeking grants because these individuals know how to construct a successful grant proposal.
Grants for Small Business Start-Ups
Although government grants for debt relief do not actually exist, there are ways for an individual to receive money from the federal government which does not have to be paid back. One of the most common ways you can seek money from the government via a grant is through a small business start up grant. These can be issued to businesses which meet the U.S. Small Business Administration's size standards for small companies.
These standards include:
- less than 500 employees for manufacturing industries
- less than 100 employees for wholesale industries
- revenue of under $6 million for retail/service companies
- revenue of under $28 million for construction industries
In addition to grants, the Small Business Association also has loan programs to initiate a new business start-ups, such as the 7 (a) Loan Program, the Microloan Program (for small, short-term loans) and the CDC/504 Loan Program, which is a longer-term loan program conducive to the economic development of a community.
Grants given to start small businesses could be indirectly considered government grants for debt relief since the grant is meant to help someone become financially successful and hopefully debt free. But with this type of grant comes the responsibility for reporting your business information to the government so they know that the money is being used properly. They will want to see proof that your business is genuine and in operation within a certain amount of time.
Fast Debt Relief
Probably the best form of government grants for debt relief comes in the federal government granting a financially stressed individual the ability to file bankruptcy and start from clean, debt-free slate. While composing, submitting and receiving an answer to a grant proposal can take several months to a year, applying for bankruptcy will immediately put a stop to harassing collection calls. The actual bankruptcy case itself may take up to two years to complete, but once you file, creditors are no longer permitted to bother you, either by phone or by mail.
While government grants for debt relief do not exist, there are other actions that can be taken which can assist in easing financial burdens, such as student loan consolidations and mortgage debt relief. If someone owes more than one federal student loan, it is possible to consolidate this into one loan with a lower interest rate and one monthly payment.
The Making Home Affordable program was implemented in 2009 for those who help qualified home owners keep their homes through mortgage refinancing or modification. To be eligible for this program, the home owner must be at risk of losing of their home and have an unpaid balance of less than $729,000.
