Bright ideas--the truth about grants.

True or false: Grant money is widely available to help you start your business.

False! Yet this myth persists. The free-money con takes a grain of truth and distorts it. It's true, there are a few grants for small businesses. These highly restrictive, difficult-to-obtain grants are given to small businesses (such as scientists, professors and engineers) to research new technologies for the government. The problem with this grain of truth is that the government is looking for solutions to things like how to capture a satellite in orbit and repair it. Can you do that?

Combine this with the boom of the late 1990s when it seemed like venture capitalists would throw money at any half-baked idea and you begin to understand why the misinformation persists. The free-money hucksters find eager victims because people want to believe there's an alternative to the old-fashioned way of raising capital through hard work, personal savings, credit cards and friends and family investments--not to mention a well-written business plan.

But what about those testimonials on late-night TV or those official-looking e-mails? While they claim they "got" so much government money for their small business, they neglect to say how. In fact, most of those featured entrepreneurs have received small-business loans. The Small Business Administration guarantees loans made by local lenders, which would not normally be approved--but startup capital is almost always very difficult to obtain.

Bottom line: Stop wasting your time with the snake-oil salesmen, books and seminars when you could be writing a business plan, improving your credit and talking to professional business counselors who can assist you getting started. After all, it's not as though the average startup needs millions to get off the ground; most new businesses are started with a very small amount of money, around $5,000.