There are many different methods available to acquire funding for a small business, but most of them require the business owner to offer something in return. Loans need to be paid back with interest, venture capitalists demand ownership in exchange for funding, and crowdfunding projects often offer perks to those who invest. However, there is one funding option that doesn’t charge interest and doesn’t expect anything in return: small business grants. Easily among the most sought-after solutions, small business grants are also some of the most difficult to get, as availability tends to be limited and the qualifications are often tough to meet. Yet by being aware of how small business grants work, you increase your chances of scoring big!
What Are Small Business Grants?
A small business grant is when an organization (including federal agencies, local governments, and private establishments) offers money to small business owners. These grants are typically given to organizations or people to provide the capital needed to accomplish a specific goal, whether it is launching a business or making certain additions or changes. Unlike a business loan, a small business grant does not have to be paid back, making it highly appealing to struggling entrepreneurs or people looking to start their first business.
However, while the idea of receiving free money might seem like a dream, it is often very challenging to obtain a business grant. For one, there is a lot of competition in terms of other businesses that also looking to receive grants, so there is only so much money floating around. Additionally, that money is not a blank check that can be used however the recipient wants: grants are awarded to meet specific needs and grant providers often require recipients to project how they’ll use the money. This includes certain objectives and milestones that must be met to receive the complete funds.
What Small Business Grants Are Available?
Small business grant offerings tend to come at three levels: federal, state/regional, and corporate.
At a federal level, most business owners go to Grants.gov and the U.S. Small Business Administration’s (SBA) website, which both offer in-depth resources on federal grants and loans. However, federal grants offered through these resources tend to be among the most difficult to secure, as there aren’t as many of them and there will be significantly more applicants. Other resources you check include the Small Business Innovation Research (SBIR) program and the Small Business Technology Transfer (STTR) program. The SBIR program is geared towards women and economically disadvantaged groups, while the STTR is open to most business owners.
At the state and regional level, most grants offered tend to be focused on the specific goals and initiatives of the local government. The SBA provides grant money at the state and federal levels, but there are also many other organizations and programs that specialize in offering funding projects in this space. The General Services Administration (GSA) also lists loans through the SAM system. These tend to be more highly focused on specific business areas, such as the State Trade Expansion Program (STEP). which is dedicated to promoting exporters.
Corporate loans are offered by various private businesses and organizations. These are much more varied and often have different requirements than government-issued loans. Some examples of this include Viva’s small business grant called the Visa Everywhere Initiative, which challenges small business owners to find unique and innovative payment solutions. There are also examples like the National Association for the Self-Employed (NASE), which awards 36one $4,000 grants every month to active members of the group.
Along with these three major distinctions, it is important to note that there are several grants made for specific demographics. There are government resources for veterans, women, and minority groups, so if you fall under any of these demographics, it is worth seeing what grants are out there. That said, the competition for these grants remains stiff, so don’t see this as an easier solution compared to more general business loans.
How to Apply For a Small Business Grant
While there are unique considerations for all small business grants, many of them follow similar application guidelines. Grants.gov has a step-by-step guide breaking down the application process, so you should familiarize yourself with the process if you plan on looking into state or federal grants. Even if you plan to use corporate or private sources though, the procedures are worth researching to ensure that you are ready.
Once you’ve familiarized yourself with the application process, do some research into grants that suit your specific needs and situation. Once you have found some opportunities that you’re interested in, read the grantor’s mission statement and funding requirements to ensure that you qualify. The application process can be long and complicated, so it is usually best to focus your efforts on grants that give you the highest chance of acceptance. Also, make sure that you follow all eligibility requirements before applying, otherwise, you’ll be disqualified.
The most important thing is to be selective about which grants you go after (you won’t have the time to apply to all of them) and to keep your expectations in check. Getting a small business grant isn’t easy: you should anticipate some rejections, as even if you seem to fit all the necessary criteria, the fact is that there’s a lot of competition for the money. It’s never going to be a sure thing, but by focusing on the initiatives that best match your business goals though, you increase your chances for success!