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Using grant money to invest, legal options

You can receive grant money from several different sources and it can be used for a variety of reasons to include investing.However, you must be careful that you only use the money in the way that is set forth in the regulations regarding the grant money.The government grants often have a lot of regulations and red tape governing the use of the money while the private sector often is a little more flexible.

Grant money can be received for a variety of reasons and nearly as many places.However, very few grants don't come with multiple strings attached.The government grants will have the most guidance and regulations on what the money can and can't be used for.In the past, the money was not as tightly monitored, but because of abuse the government has tightened the reins and you will have to be very careful on what you use the money for.

Many of the grant programs will only give you the money

as it is needed instead of giving you a lump some payment.This is very similar to a construction loan for a house.The bank wants to make sure the money is being used to build a house because it is the collateral for the loan.Hence, they only give out the money as needed and they have inspectors during the process to make sure the money is spent correctly.Grant money is often doled out in the same method.You will most likely be required to submit progress reports and show how the money is being spent and some grants will even have inspectors monitor the progress.

When you apply for the grant, you will most likely have to submit a budget.The grantor normally requires the budget so they know that you can complete the project with the funds available.For example, if you are building housing for the poor and you receive a grant for $500,000, but the apartment complex will cost $1,000,000 then you will either have to obtain additional funding or you will most likely not receive the grant.

The budget will most likely be followed and monitored very closely.If this is the case, you will not be able to invest your grant money in other purposes besides the specific purpose the grant was awarded for.You will want to hold the grant money in an account that is liquid enough to make draws from to support the budget as needed.You may want to consider a money market or checking account for this purpose.Neither of these accounts is really considered an investment.

If you receive the grant money in lump some, you may want to invest it to provide additional funding for the project.However, you must be very careful when you consider this option.You must first check to see what the rules are pertaining the money that was granted for use.If the money is not tightly controlled, then you may not have any legal issues investing the money to benefit your business.However, most grants are very tightly controlled to avoid fraud issues.

You should also consider an investment vehicle that will preserve your principle.If you receive a grant that will only use half the money in the first six months a six month Cash Deposit may be a good way to preserve the principle while growing the grant money.The stock market will most likely be a poor investment because stocks often need more time than six months to make a good return and you are putting the entire principle at risk.

In summary, the best way to know your options for investing a grant is to read the instructions and regulations governing the grant.You may have a lot of leeway with some grants, but most are very restricting.

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