The classification of the business is done mainly based on the investment made, production capacity, number of persons employed and the profit earned by the organization. Some of the businesses are run with the funds invested by the owners without any assistance from the government. But, mostly many of the business depend on the government for its development. Generally, the entrepreneurs of the business approach the government for grant money to expand their business as when the banks are approached for loans, they need to repay the amount which is not applicable in the case of grant money. Thus the government also offers grant to these kinds of business concerns just for preventing the interest that has to be paid to the banks on ac count of the loan amount. The grant for the business helps the proprietors to get the capital amount without worrying about the repayment of the same in future.
The grants for the business supports in energizing the development of the small organizations from the day of receipt of the financial aid as the source of finance are reliable and stable. Most commonly, the grants for the business are obtained from the authorities available locally or from the state authorities. Some of the organizations that are established well and even some industrial enterprises also do offer grants, but are not desirable all the time.
The funds provides towards business are always limited. It targets only particular areas. The target area is the principal value where the capital venture is quite low and in some cases they will not be available. The business grants are also offered to the businesses like husbandry, farming and even fishery. These grants are also targeted to fund for the organizations who wish to hire manpower or wish to purchase new equipments and machinery. If the existing business needs for more place and want to go in for additional building, then the grant is offered for purchase of new building or to construct some extra place in the existing building. In the case of businesses that are well established, then the grants are provided to these organizations for development and research and also for technology improvement. business grants are also given for those organizations who do export business for enhancement of trading internationally.
It is vital that the business grant can be obtained only when the draft for the business plan is submitted properly. Generally, the loan is provided by the business Administration and the borrower of the grant should be very particular in mentioning the use of funds acquired via grant. Analysis of credit will be done once the grant is sanctioned.