If you're considering applying for a federal grant -- or paying for the right to apply for a federal grant -- think again. Although there is government-sponsored help for homeowners struggling to pay their mortgages and small-business owners trying to fund a business, garden-variety borrowers who are in trouble with their personal loans will have to look elsewhere for help.
What Grants Are (and Aren't)
According to the Department of Health and Human Services, a grant "is an award of financial assistance from a federal agency to a recipient to carry out a public purpose of support or stimulation authorized by a law of the United States. Federal grants are not federal assistance or loans to individuals."
For example, imagine that Congress has passed a law mandating that every single-family home have solar panels installed. A grant applicant might apply for funds to develop and manufacture inexpensive panels to support this legislation. Although federal, state and local governments award millions of dollars in grants every year, the government does not supply taxpayer-funded grants to assist consumers who need debt help.
Legitimate Debt Help
Although the government doesn't supply grants to help troubled borrowers, there is help available. Many nonprofits exist solely for the purpose of helping consumers and lenders reach amicable debt repayment agreements.
The most prominent of these is the National Foundation for Credit Counseling. Although the NFCC, and other credit counseling agencies, are not government-funded (the NFCC is supported by donations from lenders and the small fees that it charges consumers who enter a debt management plan), the NFCC is recommended by the Federal Trade Commission as a legitimate resource for the financially strapped.
Government-Sponsored Mortgage Help
The government is willing to help you with your mortgage payment, however. With millions of Americans frustrated by watching their home values drop every year since 2007, the Obama administration launched the Making Home Affordable program. Homeowners who have FHA loans are eligible for a streamline refinance. In this program, the interest rate on the mortgage is lowered, with little paperwork required. You may not need an appraisal, either, a major plus if you suspect the property value isn't what it once was.
Other borrowers may decide to apply through their lender for a mortgage modification. Although the program has achieved limited success, if you're struggling, it's worth a chance. Your interest and principal may be lowered or your term extended. The goal of the program is to make your mortgage payment equal to 31 percent of your gross monthly income.
Small Business Funding
The federal government has for years offered small-business funding in the form of loans big and small. If you need a loan smaller than $35,000, consider applying through a participating lender for a microloan. If you need more, a small-business loan may be the ticket; they're available up to $2,000,000.
Note that both programs are loans -- not grants. They must be repaid, and borrowers must meet certain criteria to qualify. Reviewing the benefits that the government offers on the Benefits.gov website is an excellent place to begin your research.
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