How to Spot Business Grant Scams
The Most Common Grant Scam Types
Advance fee scams are the most prevalent. A company contacts you (by phone, email, social media, or online ad) claiming they can help you get a government grant. They charge an upfront fee, typically $200 to $2,000, for "processing," "application assistance," "grant search services," or "guarantee fees." After you pay, you receive either nothing, a generic list of grants you could have found for free on Grants.gov, or a worthless packet of publicly available information. The company then becomes unreachable or denies any guarantee of results. The FTC has shut down dozens of these operations, but new ones replace them constantly because the business model is simple and profitable.
Fake government agency scams use names that sound official: "Federal Grant Administration," "US Business Grant Foundation," "National Grant Fund," or "Small Business Grant Agency." These are not real government agencies. They create professional-looking websites with .com or .org domains (never .gov), use American flag imagery and official-sounding language, and claim to administer grant programs that do not exist. They collect personal information (Social Security numbers, bank account details, tax returns) that is then used for identity theft, or they charge fees for non-existent grants.
Phishing and identity theft scams disguise themselves as grant applications. You receive an email or see an online ad claiming you have been "pre-approved" or "selected" for a government grant. To "claim" the grant, you need to provide your Social Security number, bank routing numbers, tax identification number, or other sensitive information through a fake application form. The scammers use this information for identity theft, unauthorized bank withdrawals, or tax fraud. Legitimate grant programs never contact you unsolicited to inform you of pre-approval, and they never request bank account information before you have submitted a formal application through their official channels.
Grant writing fee scams charge inflated fees for grant writing services that produce low-quality applications unlikely to succeed, or that are never submitted at all. Unlike the advance fee scam, these operations deliver something, just not anything useful. They charge $1,000 to $5,000 for generic applications that are not tailored to specific programs, use boilerplate language that reviewers immediately recognize, or miss deadlines and formatting requirements that disqualify the application. Legitimate grant writers exist and provide valuable services, but they are transparent about success rates, provide references from past clients, and charge reasonable fees for the work involved.
Red Flags That Signal a Scam
Unsolicited contact. If someone contacts you about a grant opportunity you did not seek out, whether by phone, email, text, social media message, or mail, it is almost certainly a scam. Legitimate grant programs do not cold-call businesses to offer money. They publish announcements through official channels and wait for applications. If you receive an unsolicited grant offer, delete it immediately regardless of how official it looks.
Upfront fees. Legitimate government grant programs never charge application fees. Corporate grant programs occasionally charge modest fees ($10 to $25) to cover processing costs, but these are disclosed upfront in published program materials, not demanded during a phone call or email exchange. Any request for hundreds or thousands of dollars in fees before you receive anything is a scam.
Guaranteed approval. No organization can guarantee a grant because grants are competitive by definition. Any company that promises you will be approved for a grant, or claims to have insider connections that ensure approval, is lying. Even the strongest grant applications face rejection when the program receives more qualified applicants than it can fund.
Pressure to act immediately. Scammers create artificial urgency: "This opportunity expires today," "Only three spots left," "You must pay the processing fee within 24 hours or lose your eligibility." Legitimate grant programs publish clear deadlines weeks or months in advance and never pressure applicants to pay fees immediately. If you feel rushed, it is a scam.
Non-government domains. Federal grant programs operate through .gov websites. If someone claims to represent a government agency but their email address is @gmail.com, @yahoo.com, or @[company-name].com (not .gov), it is fraudulent. Similarly, if the website URL is .com, .org, or .net rather than .gov, it is not an official government site, even if it displays government logos and official-sounding language.
Requests for sensitive information upfront. Legitimate grant applications ask for business information (EIN, business plan, financial statements) but do not ask for your Social Security number, bank account credentials, or credit card information during the initial application phase. If a "grant application" asks for your bank login credentials or credit card number, it is phishing for financial theft.
How to Verify a Grant Opportunity
If you encounter a grant opportunity and are not sure whether it is legitimate, verify it before providing any information or money. For federal grants, search for the program name on Grants.gov. If it is not listed there, it is not a real federal grant program. For state grants, call your state economic development agency directly using the phone number from the agency's official .gov website (not a number provided in the suspicious communication) and ask whether the program exists.
For corporate grants, visit the sponsoring company's official website and look for the grant program in their corporate responsibility or community investment section. If you cannot find the program on the company's own website, it is likely fraudulent. For local grants, call your city or county economic development office to verify the program.
Search the organization's name plus "scam," "complaints," or "reviews" to see if other business owners have reported problems. Check the Better Business Bureau (BBB) for the company's rating and complaint history. Look up the company's registration with your state's Secretary of State office to verify it is a legitimate legal entity. The FTC's website (ftc.gov) maintains information about known grant scams and guidance for reporting new ones.
What to Do If You Have Been Scammed
If you paid money to a grant scam, contact your bank or credit card company immediately to dispute the charge and request a chargeback. File a complaint with the FTC at reportfraud.ftc.gov. File a complaint with your state attorney general's consumer protection division. If you provided your Social Security number or bank account information, place a fraud alert on your credit reports through one of the three major credit bureaus (Equifax, Experian, or TransUnion), which will notify the other two. Monitor your credit reports and bank accounts closely for unauthorized activity for at least 12 months following the incident.
Report the scam to help protect other business owners. Beyond the FTC and state attorney general, report to the SBA's Office of Inspector General if the scam impersonated the SBA, to the FBI's Internet Crime Complaint Center (IC3) if the scam occurred online, and to your local Better Business Bureau. The more reports these agencies receive about a specific operation, the faster they can take enforcement action to shut it down.
Where to Find Grants Safely
Stick to verified sources for your grant search: Grants.gov for federal opportunities, your state economic development agency website for state programs, your local SBDC for local and regional programs, and the official websites of known corporate grant programs. Our grant-finding guide walks through the safe, systematic process for identifying legitimate grants. Every program mentioned in our business grants guide has been verified through official sources. When in doubt, ask your SBDC counselor to verify a program before you invest time in an application.