What Personal Grants Are and How to Apply

When you need financial assistance but want to avoid taking on debt, a personal grant may be one option to consider. The government offers grants designed to help Americans cover certain expenses and navigate periods of financial hardship. These programs typically have specific eligibility requirements, however, and not everyone will qualify.

You may also benefit from speaking with a financial advisor to better understand how grant assistance fits into your broader budget and financial plan.

What Are Personal Grants?

Many people are familiar with government assistance programs such as small business grants and subsidized healthcare. Fewer realize that certain grant programs are also available to individuals. If you meet the eligibility requirements tied to an approved use of funds, a personal grant may be an option. Unlike personal loans, grants do not have to be repaid, making them a valuable resource for individuals facing financial hardship.

Most federal grant funding is awarded to institutions such as universities, hospitals and nonprofit organizations. However, a limited number of programs provide funding directly to individuals, along with a broader set of government benefits that do not require repayment. For the purposes of this article, all government financial assistance available to individuals that does not need to be repaid is referred to as a personal grant.

It’s important to note that the government does not offer grants to help pay off consumer debt such as credit card balances. However, it does provide financial assistance for Americans dealing with specific qualifying financial challenges.

When to Seek a Personal Grant

A personal grant can be viewed as an alternative to either going without essential needs or taking on debt. Some programs are designed to support everyday expenses, such as children’s clothing or school supplies, while others may help with longer-term financial goals, including assistance related to housing.

If you are experiencing financial strain, applying for a grant may be worth considering. Unlike payday loans or installment loans, grants do not create ongoing repayment obligations or interest costs. There is also no fee to apply for legitimate government grants, meaning the primary investment is the time and effort required to complete the application.

That said, grants do not offer immediate relief. Because these programs are administered by government agencies, applicants should expect some level of administrative processing and delay. While the approval process may take longer than obtaining a high-cost loan, government grants are a far safer option than borrowing through high-interest lenders.

Applying for Personal Grants From the Government

The government focuses its grant-giving energies on certain classes of individuals. For example, veterans and single mothers have better odds of getting a personal grant than young single men with no children and no record of military service. Still, you shouldn’t let fear of rejection keep you from applying for the funds you need.

Let’s talk about how to apply for personal grants. Go to benefits.gov and you’ll be able to start searching for grants and benefits for which you might be eligible. ¹ Search all categories or choose one of the following categories:

• Child Care/Child Support
• Counsel/Counseling
• Disability Assistance
• Disaster Relief
• Education/Training
• Employment/Career Development Assistance
• Energy Assistance
• Environmental Sustainability/Conservation
• Food/Nutrition
• Grants/Scholarships/Fellowships
• HIV/AIDS
• Healthcare
• Housing
• Insurance
• Living Assistance
• Loan/Loan Repayment
• Medicaid/Medicare
• Military: Active Duty and Veterans
• Social Security/Retirement
• Tax Assistance
• Volunteer Opportunities

Whether you need help making rent, tackling student loans or paying your medical bills, the government may have a grant for you. Benefits.gov will take you through a quick onboarding process. The site will prompt you to answer questions about personal details such as your income, marital status, age, employment status and place of residence.

Once you answer all the questions, you’ll see a list of grants, loans and temporary assistance programs for which you may be eligible. Then, it’s up to you to apply for the help you need. The application process can take weeks before you get a response so it’s important to be patient and apply as early as possible.

Beware of Fraud When Applying for Personal Grants

We’ve told you how easy it is to find government grants online, like first-time home buyer grants, using Benefits.gov. If you have internet access and a little time you can get an answer to the question: “Am I eligible for government grants?” There’s no need to pay someone to search for you.

A quick online search for personal grants will turn up many sites offering to get you federal grant money. If they’re offering help searching for grants from private organizations and non-profits they may be offering a worthwhile service. With government grants, though, there’s really no reason to hire a middleman to find grants for you.

Some good advice is to take the DIY approach to grant applications and stay away from sites that charge a fee for their services. At best, some of these sites are taking money for something you could do yourself, for free.

At worst, some of them may be phishing sites that just want your name, date of birth and Social Security number so they can use them to commit fraud. Don’t be tempted by sites that guarantee they’ll get you money. And if you get unsolicited offers of personal grants by phone, mail, or email they’re not from the government – they’re from fraudsters.

Personal Grants and Taxes

Taxes on personal grants can vary based on the nature and purpose of the grant, as well as the specific tax laws in your jurisdiction. It’s important to understand what your tax liability is going to be before you accept a grant that could require you to pay a bunch of tax you can’t afford. Here is a general overview of how taxes might work for personal grants:

Taxability of Grants

• Taxable Grants: Most personal grants are considered taxable income by the IRS unless specifically exempted. This means that you need to include the amount received in your gross income for the year.
• Non-Taxable Grants: Some grants are specifically excluded from taxable income, such as certain disaster relief payments or specific types of scholarships.

Reporting the Income

• Form 1099-G: If you receive a taxable grant, the grantor may issue a Form 1099-G, which reports the amount of the grant to you and the IRS.
• Other Forms: Depending on the nature of the grant, you might receive other forms, such as a Form 1098-T for educational grants.

Exclusions and Exceptions

• Disaster Relief: Payments for disaster relief are generally excluded from taxable income if they are made by a qualified government or charity and used for necessary personal, family, living, or funeral expenses.
• Scholarships and Fellowships: Certain scholarships and fellowships used for tuition, fees, books, supplies, and equipment required for courses are not taxable.
• Qualified Expenses: If the grant is used for specific qualified expenses, such as educational or medical expenses, you might be eligible to claim deductions or credits. For instance, educational grants used for tuition might qualify for education credits.
• Business Grants: If the grant is related to a business or self-employment, the expenses paid with the grant may be deductible as business expenses.

If you receive a significant grant, you may need to make estimated tax payments throughout the year to avoid underpayment penalties. This is especially relevant if the grant substantially increases your income. Understanding the specifics of your grant and how it fits into your overall tax picture is crucial, especially if you’re receiving a sizable grant that needs to be accounted for.

You may want to talk to a tax professional to help you see what your tax liability might be for taking a specific amount of money or type of grant.

Alternatives to Personal Grants

Not everyone will qualify for a personal grant, and available funding may be limited. If you are not eligible, there are other legitimate ways to seek financial assistance depending on your circumstances.

Low-interest personal loans from community banks or credit unions may help with short-term expenses. These loans require repayment but can offer lower interest rates than credit cards or payday lenders.

Government assistance programs such as unemployment benefits, housing vouchers, food aid, or energy assistance can also provide relief for essential costs. These programs are typically based on income or household need and do not have to be repaid.

For education-related expenses, scholarships, fellowships and work-study opportunities can reduce costs without creating new debt. Many of these programs are available through schools, nonprofit organizations and private foundations.

Community and nonprofit organizations, including local charities and faith-based groups, may also offer emergency grants or hardship funds for specific situations like rent, utilities, or medical expenses.

When exploring these alternatives, review eligibility criteria carefully and confirm that any program or lender you work with is legitimate and transparent about its terms.

Bottom Line

Personal grants can provide a valuable alternative to missing payments, cutting back on essential expenses or taking on additional debt. Those who are interested should review eligibility requirements carefully, complete applications accurately and avoid third parties that claim to guarantee free money. When used appropriately, personal grants can play a positive role in your overall financial strategy, helping you stabilize your finances in the short term while supporting longer-term money management goals.

Tips for Managing Your Finances

• To ensure you can retire and achieve your other financial goals, you need to be in control of your finances. A financial advisor can help with this. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
• If you’re not ready to work with an advisor, creating a stringent budget is a good first step toward mastering your finances. SmartAsset’s budget calculator can help you start.

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