Have you been thinking that you want to start a business? So much planning goes into following your dream, and we know it can be a struggle to finance its startup and daily operations. We also know that finding funding opportunities for your enterprise can be harder during a global pandemic.
You may not be eligible for small business loans. You also may not be open to additional loan debt to manage or want to max out your credit cards because you may want to conserve cash. If that’s the case, small business grants may be your best option.
Small business grants are funds made available for economic development. Many are from government or nonprofit programs and you don’t have to repay them. If your small businesses meets the granting organization’s criteria, you can apply and may receive funding.
Most grants are for specific business purposes, so it’s important to understand where to find and how to get a small business grant, since neither is simple. Start by researching them and understanding the rules for getting and using them. Be prepared to commit significant time to this process.
FAQs About Small Business Startup Grants
Many who want to start a business know this “free money” is available, but most business owners have questions about where to begin. The Small Business Administration, or SBA, is here to help.
The government agency can provide general information about this unique funding, including what makes small business startup grants different from small business loans. They also make sure you understand how to get a small business grant.
If you have questions, they can get you the answers you need. So, if you’re wondering, “Where do I find small business grants for service-disabled veterans?” The SBA can provide you with overviews of programs specific to your business or affinity group—like veterans.
What Government Grants Are Available for Small Businesses?
There are several sources of federal government grants available to qualified small businesses. Best known is the Small Business Administration (SBA), which most people know for its loans. Since 1953, the agency has helped small businesses launch, operate and grow. That includes offering grants directly and in partnership with other organizations, which are available to most small business owners and types.
But other federal government agencies and state and local agencies also provide small business grants. You can find grant funds for national business activities by going to Grants.gov where you’ll learn what’s available, how to qualify and how to apply. If going global is your interest, you’ll want to apply for a State Trade Expansion Program (STEP) grant.
However, grants like these three below are so unique that they aren’t easy to find by typing “small business startup grants” into a search engine or extensive database. If one or more of these applies to your small business activities, visit their websites to learn more.
- SBIR and STTR Grants: These are short for “Small Business Innovation Research” (SBIR) and “Small Business Technology Transfer” (STTR). SBIR is for entrepreneurs focused on developing technology headed for sale to the public. STTR grants target those small research and development businesses focused on technology innovation and existing technology improvement. SBA and multiple federal agencies take part in offering these highly competitive grants.
- National Institutes of Health (NIH): This agency offers its grants under its parent, the Department of Health and Human Services (HHS). Their focus is providing grants to small businesses in biomedical technology research and development. Besides SBIR and STTR grants, which require a complex application process, there are also institute specific grant programs.
- USDA Rural Development Business Grants (RDBG): This competitive grant program provides technical help to small rural businesses and cooperatives. Small means fewer than 50 employees and up to $1 million in annual revenue. That agency strictly defines “rural,” too. This fact sheet provides a detailed summary of the program and its eligibility requirements.
There are multiple other small business grant programs that require a deep dive into the Grants.gov or the Catalog of Federal Domestic Assistance (CDMA) databases or Challenge.gov website to find. The latter is a list of federal government agency-run creative, technical and scientific competitions that lead to monetary prizes. By helping those agencies solve problems, the contest drives innovation.
Who Qualifies for Small Business Startup Grants?
A wide variety of business owners qualify for small business startup grants. Qualifying factors are based on your location, business size, business type and military status.
Besides veteran-owned enterprises, there are grant funds available for green businesses, small nonprofits, women-owned and minority-owned businesses.
Is My Business Eligible for a Grant?
Eligibility for grants for small businesses, including COVID-19 grant funds, depends on your business type and the grant you’re applying to get. For example, granting agencies may only extend grants to those with certain statuses. So, you have a better chance at finding and getting approved for grants if you’re a veteran, woman or minority business owner, Native American or LGBT.
Criteria can differ by each granting agency, the location of your business, the grant maker or your business owner category. Check eligibility requirements for each grant by going to its site and calling or emailing before you apply.
Do You Have to Pay Back A Small Business Grant?
Most business owners are hesitant to use external funding for their businesses. In fact, fewer than 1% of all US businesses use federal or state grants to fund their business. Unlike loans, however, grant money doesn’t require repayment.
But that’s why grants might have far tougher eligibility requirements than loans. Usually, you don’t require security for grants, but there may be limits to the number of employees you can have, annual revenue your business makes or the location where your business can be.
How to Apply for Small Business Grants
It’s possible to receive highly competitive and high-dollar grants regularly, since some get awarded every year. But the key to scoring these funds is learning how to get a small business startup grant.
The application process for receiving small business startup grants is hard. Each grant application can be long, taking weeks to complete and submit. That’s why you’ll only want to apply for grants that you have the best qualifications for and have a good chance of winning.
Fortunately, there is a lot of free help for doing these applications right. Here are the steps for most grant applications:
- Find free help to start the process. Contact your local SBA or your Small Business Development Center (SBDC) for free resources for researching grants and understanding their requirements. You can take training courses to learn how to get a small business startup grant, form relationships with granting agencies and officers and completing grant applications.
- Research each grant carefully. You must understand the eligibility criteria for you and your business, since most grant applications ask about both. Know the deadlines and meet them or get your application rejected. The agencies rarely give extensions, and most agencies don’t make exceptions to deadlines for individual businesses.
- Compile and submit all the documents required. The grant making agency or organization provides a detailed list of them. But they usually include current financial statements, and often, a business plan. Incomplete or incorrect applications lead to delays and grant denials.
- Understand certification or verification requirements. If you must meet them, make sure you do before applying. That’s where the SBA or your local Small Business Development Center (SBDC) can be helpful.
- Make sure you need not register with any required government databases. Those include System for Award Management (SAM) or a state or local government grant database before you apply. If you do, thoroughly understand and complete the right process.
- Know how to write a strong grant proposal. This is a specialized skill and you may have to pay someone to help you. Or, you could learn through a local nonprofit, the SBDC or SBA.
- Hire professionals when necessary. For example, a qualified accountant and attorney or reputable consultant could improve your grant application. Research them carefully or get referrals from people you trust.
Avoid paying for access to information on government grants or paying vendors to complete your grant applications, unless you’ve verified them. Instead, use the resources here to find and apply for grants at no cost. Also, make sure you’re not applying for a legitimate grant that requires you to put up matching funds, like cash or financing.
Other Grants to Start a Small Business
Government agencies aren’t the only ones offering grants to small business owners for startup or business development. They’re also available privately through national or community foundations, corporations and research institutions.
Finding many of these grants funds may require a database subscription, but choose reputable ones like Candid.org that share accredited grant fund resources.
Here are a few corporate grant funds to consider.
- Visa Everywhere Initiative: Startups and fintechs that innovatively solve business payment problems could win $150,000 in prizes and global recognition from Visa. The brand presents the four finalists to its Payments Forum annually.
- FedEx Small Business Grant Contest: This contest is open to for-profit businesses with fewer than 99 employees and in operation for at least six months. The cash prize is $25,000 and funds towards print and business services. Read the full eligibility rules for this annual contest.
- Patagonia Corporate Grant Program: Innovative nonprofits that work to preserve the environment can get $20,000 to $30,000 from the brand. Criteria are strict and geographical locations limited. Read the eligibility rules for more information.
Grant funding through private organizations also may require business certifications for women, minorities, LGBT or veterans. The application process is equally demanding to applying for government grants, so you can use the rules for applying above. Just understand where there are differences by checking with the granting organizations.
While applying for grants is hard, there are additional steps you can take to ensure success. Get to know the people and organizations where you’re applying for grants, whether government agencies or private programs. Like with most business activities, who you know and how well you know them plays a role in getting grant funding.
You also should stay informed about which grant making agencies or organizations change important personnel or grant fund requirements. That way, you won’t depend on getting grants that you no longer have access to and can plan properly for your future grant funding needs.
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