The U.S. Government is Literally Paying People to Start Businesses in 2026

SUMMARY

Codie Sanchez, founder of Contrarian Thinking Capital, reveals that billions in US government and state funds, grants, loans, and tax incentives are available but often unused by small businesses, providing actionable playbooks for entrepreneurs to secure capital and maximize tax efficiency.

STATEMENTS

Over $50 billion the US government earmarked for small businesses last year went more than 30% unused because founders were unaware of its existence, highlighting a vast, untapped resource.
The system is not inherently rigged against small businesses; rather, the rules and incentives were intentionally written to support them, particularly after events like the Great Depression and World War II, to foster economic competition and job creation.
State-level economic development agencies actively seek to support businesses through tax credits, wage reimbursements, and training grants, essentially offering to pay entrepreneurs to build something in their state.
The government attempts to balance the inherent risk of entrepreneurship with incentives, using grants, tax credits, and cheap loans to encourage individuals to start and grow small businesses, which are the backbone of the economy.
Utilizing specialized tax structures, such as switching from a solo LLC to an S Corp election, can legally save founders significant amounts of money (e.g., $50,000 annually on a $500K profit) by avoiding the 15.3% self-employment tax on distributions.
The Qualified Small Business Stock (QSBS) exclusion allows entrepreneurs and investors meeting specific criteria to exclude up to $10 million in federal capital gains when selling shares in a qualifying small C Corp, acting as a massive tax cheat code.
Leveraging various business tax credits—including the Working Opportunity Tax Credit (WOTC), Section 179 Deduction, Historic Rehab Credit, and New Markets Tax Credit—can fundamentally transform a standard business into a highly tax-efficient cash-generating asset.
Successful founders consistently incorporate mentorship and consulting, which can often be treated as a tax-deductible business education expense, allowing them to gain expertise and accelerate growth without fully incurring the cost.

IDEAS

The US government left over $15 billion on the table last year because small businesses failed to claim available funds and grants, illustrating a widespread ignorance of financial opportunities designed to bolster them.
A single "bootstrapped" entrepreneur utilized workforce training funds and wage credits to grow their staff to over 15 employees in one year, with government reimbursement covering the majority of their payroll expenses.
Economic development programs are not politically biased, as red and blue states alike offer significant incentives like $5,000 per full-time hire (Indiana) or 50% payroll reimbursement in high-poverty areas (Tennessee).
The government's motivation to provide extensive small business support is rooted in history (post-Great Depression and WWII), aiming to prevent monopolies and recognizing that small businesses create two out of three new jobs, directly translating into voter engagement.
A business owner purchasing a nail and hardware store secured a government loan via the SBA instead of requiring private equity investment, allowing them to own 100% of the company outright instead of forfeiting equity forever.
Sophisticated entrepreneurs structure their entities to utilize the QSBS exemption, allowing up to $10 million in federal capital gains to be tax-excluded, and further increase this benefit by issuing shares to family members (e.g., spouse) for a combined exclusion cap.
Specific capital expenditures, such as buying up to $1.25 million in equipment or vehicles, can be written off instantly using the Section 179 deduction, even if the purchase is financed.
By strategically combining several tax incentives—like WOTC for hiring a veteran, Section 179 for equipment, Historic Rehab Credit for remodeling, and New Markets Tax Credit for investing in low-income zones—a boring business is converted into a tax-efficient enterprise.
Owning your audience through a newsletter (email list) is posited as a fundamental online asset, avoiding reliance on uncertain external platforms or government structures, mirroring the early success of figures like Warren Buffett with his investor letters.
Businesses can secure significantly cheaper capital through targeted programs, such as SBA microl loans or state-run low-interest programs (e.g., 2-5% rates in PA, Ohio, Illinois), fundamentally changing the viability of starting a business with debt compared to high-interest consumer credit.

INSIGHTS

The greatest financial obstacle for many small business founders is not the lack of opportunities, but rather the unfamiliarity with and unwillingness to navigate the rules of the existing government incentive landscape.
Intentional utilization of state and federal incentives effectively allows entrepreneurs to build and scale their assets using subsidized or "other people's money," converting systemic complexity into a competitive advantage.
True financial sophistication for a business owner involves not just generating income, but strategically minimizing tax liabilities through legal entity structuring and claiming available credits, transforming gross profit into retained wealth.
Historical economic policy shows that the underlying purpose of many government programs is to de-risk entrepreneurship and distribute economic power, providing a substantial 'hand on the scales' for those who know where to look.
Leveraging knowledge acquisition—through programs, consultants, or mentorship—as a tax-deductible business expense creates a virtuous cycle of continuous improvement funded partially by the government.
The paradigm shift from "broke founder" (focused only on making money) to "rich founder" (focused on making and keeping money) is defined by mastering the tax code as a chessboard, not just adhering to basic compliance.

QUOTES

"The rich don't just make more money. They play the tax system. They play it like a chessboard."
"The system is rigged against them. But when you learn the rules, you realize these rules were actually written for you if you know the game that you're playing and you play the right one."
"It is literally a cheat code for people who are willing to build or back small businesses."
"If you're trying to win without mentors, I don't know. I think you're just playing on hard mode."
"It's the same business, same revenue, same profit, just 50,000 per year captains that have donated to the government."

HABITS

Proactively seeking out and applying for state and federal economic development incentives, often requiring only 30 minutes online.
Consulting with a licensed accountant or "tax bro" before hiring or expanding to ensure the business entity and shares are correctly structured for maximum tax efficiency like QSBS or S Corp status.
Treating high-quality business education, consulting, and advisory programs as necessary and ordinary business expenses to be deducted at tax time.
Consciously making the strategic decision to "borrow like a business owner" by securing low-interest SBA or state-run loans instead of resorting to high-APR consumer debt like credit cards.
Regularly communicating with a bookkeeper or CPA to categorize professional business consulting invoices and ensure appropriate tax deductions are claimed.

FACTS

Last year alone, more than $15 billion in available US government funding for small businesses went unclaimed.
Small businesses constitute 99% of all businesses in America and are responsible for creating two out of every three jobs.
The SBA saved 110,000 businesses with grants and loans following the Great Depression.
Corporations like Google and Microsoft dropped $49 billion and $30 billion, respectively, on Research and Development (R&D) last year, benefiting from massive tax breaks allowing them to expense it all upfront.
The QSBS exemption allows an exclusion of capital gains up to $10 million, or ten times the original investment, whichever is greater.

REFERENCES

Main Street Millionaire Live
Contrarian Thinking Capital & Co.
Open Fortune (Fortune cookie advertising company)
Peter Thiel (investor)
Warren Buffett (investor letters)
Beehiiv (newsletter platform)

HOW TO APPLY

Search your specific state's governmental resources for "economic development incentives" to identify localized financial and educational opportunities.
Actively seek out specific funding programs with names such as 'Workforce Training Credit,' 'Job Tax Credit,' or 'Capital Investment Reimbursement,' as these indicate potential cash or wage reimbursement.
Strategically apply for these state programs before initiating the hire or expansion, submitting necessary basic payroll or expense documentation to validate compliance.
Immediately consult with your accountant to switch a profitable solo LLC to an S Corp election, enabling the founder to take distributions that avoid the full 15.3% self-employment tax.
Utilize tax credits applicable to real-world business actions: hire a veteran (WOTC), purchase new critical equipment (Section 179), or invest in renovating a commercial space in designated zones (Historic Rehab/New Markets Tax Credit).

ONE-SENTENCE TAKEAWAY

Mastering the existing tax code and claiming unused government incentives is the legal blueprint to scaling and retaining business wealth.

RECOMMENDATIONS

Review the US tax code not as a compliance burden but as an actionable playbook designed to financially reward those who build and scale qualifying small businesses.
Invest in business education and mentorship programs as a primary strategy, knowing that many such expenses are deductible, effectively reducing the cost of accelerated learning and profitability.
For any profitable sole proprietorship or LLC, immediately explore making an S Corp election to minimize the crippling 15.3% self-employment tax on non-salary income distributions.
Shift the business's capital strategy from high-interest consumer debt (credit cards) to low-rate governmental financing options like SBA or state-run microlending programs.
Systematically check if your business qualifies for the QSBS exemption if structured as a C Corp, setting up future investors and founders for massive federal capital gains exclusions.

MEMO

The Untapped Billions: How Savvy Founders Fund Growth Through Government Incentives

In the often-complained-about landscape of small business regulation, a startling reality remains largely hidden: the US government is actively offering billions of dollars in grants, loans, and tax breaks that most entrepreneurs fail to claim. Last year alone, over 30% of the $50 billion allocated for small business support was left untouched. This oversight represents a profound missed opportunity, fundamentally blurring the lines between operating an economically functional business and operating an optimally tax-advantaged one. The truth is, the system is not entirely rigged against small enterprises; dating back to post-Great Depression and WWII recovery, the rules were written to ensure the small business backbone of the US economy (which generates two out of three jobs) not only survives but thrives.

The crucial difference between the "broke founder" and the "rich founder" lies in legal entity structuring and a sophisticated understanding of the tax code. By knowing the game, entrepreneurs can utilize state economic development incentives—such as wage reimbursements and training grants—that essentially pay them to hire local staff and improve labor skills. Furthermore, simple changes, like electing S Corp status over a solo LLC, can instantly save founders tens of thousands of dollars annually by avoiding the onerous 15.3% self-employment tax on profit distributions. This strategy reclassifies cash flow, leaving more capital in the founder's hands without altering the company's revenue or profit performance.

Sophistication in business is also defined by aggressive but legal use of specialized tax credits. For instance, the Qualified Small Business Stock (QSBS) exclusion offers a monumental tax cheat code, allowing entrepreneurs to exclude up to $10 million in federal capital gains upon selling a qualifying C Corp if certain holding periods are met. Complementary credits, such as the Section 179 deduction, permit immediate write-offs of up to $1.25 million in equipment, accelerating tax savings and improving cash flow. When combined, these credits—including WOTC for hiring veterans or the New Markets Tax Credit for investing in low-income zones—can transform an otherwise "boring" maintenance business into a highly efficient cash-generating machine.

Beyond tax mastery, access to capital dictates growth. While many founders chase high-risk VC funding or resort to high-interest consumer debt, the government intentionally provides low-interest options. SBA loans, including microlending programs, offer rates often significantly better than standard bank or credit card APRs, allowing founders to finance growth and acquisitions with strategic and affordable debt. Similarly, investing in business education, mentorship, and high-level consulting should be viewed as a mandatory, tax-deductible expense. By categorizing such spending as an "ordinary and necessary business expense," founders effectively get smarter and more profitable while Uncle Sam subsidizes the cost,