Free Money: 5 Ways To Find Cash You Don't Have To Pay Back

Every business can benefit from having more money, especially the kind you don't have to pay back. Take advantage of free money opportunities and free up the cash within your business.
October 16, 2013

With bank loans still very difficult to get, small-business owners need an easier way to find “free cash.” The trick is knowing where to look both outside and inside their companies. Where should you start looking?

Federal Grants

Federal grants for businesses are typically aimed at specialized industries that have been targeted by the government. For example, they may want company development projects that include specific scientific and medical research or conservation efforts. The Small Business Innovative Research program (SBIR), coordinated by the SBA, awards grants to develop innovative technological products. The SBA has a grants search tool for small businesses that tracks all of these. The federal government also has a search tool to find grants available through every agency. 

State Grants

At the state government level, business grants are tied to a specific agency’s goals. They typically serve regional economies and promote specific areas such as clean energy development. For example at Connecticut Innovations, Phyllis Pierce, founder and CEO of My Luck Club, received $25,000 from this state agency for her company. A good starting point is to look at the directory of online economic development agencies by state for specific geographic areas.

Business Plan Competitions

As entrepreneurship becomes popular, there are increasingly more business plan competitions that have big prizes. Many of these are sponsored by universities that want to promote their schools. Jonathan Weber won $10,000 for his application, eDentified, a powerful people search engine, at the Pennsylvania State System of Higher Education (PASSHE) Student Business Plan Competition.

Corporations are also getting involved in small-business competitions with prizes up to $250,000 as a way to support local communities. Quiana Cordé, founding member of Barazzo, won $25,000 at a Miller Lite competition. Many local incubators sponsor contests as well. For example, Pet Cooler Carrier just won the People’s Choice Award in St. Louis at Start Up Connection.


Some countries are giving grants to attract American entrepreneurs. Aljosha Novakovic left the startup world of Palo Alto, California, to run his company, Medko Health from Santiago, Chile. He participated in Start-Up Chile, a program designed to attract startups to Chile, which provided $40,000 in equity-free seed capital for participating companies.  

Inside Your Company

There's also “free” cash flow inside every company. The quicker cash is received or the later it's paid out, the higher your end-of-month balances will be.

1. Cut payment terms or collect money upfront. Remember, credit is a privilege. Try to get payments in advance or at the time of product delivery. Cut the length of time that accounts receivable is due to the company by at least a week. For example, if the company does an average of $100,000 a month and typically collects payment in 30 days, cutting collection by one week can add $25,000 of cash flow to the company account.

2. Extend accounts payable. Don’t pay late, but negotiate longer terms to pay company bills. For example, if expenses are $50,000 a month and the company typically pays in 28 days, sending payment instead in 35 days will add $12,500 of cash flow to the company account.

3. Cut inventory. The more products that are in inventory for a longer period of time, the more cash they consume from the company. Try to keep inventory levels down and still meet the targeted fill rate. Look at inventory turns, reorder points, and the amount being reordered at any time. For example, if a company typically stocks five items that cost $100 each, if it's able to reduce inventory to four items, that will add $100 of cash flow to the company account.

Where have you found free money inside and outside your business?

Read more articles on small-business cash flow.

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