Finding the right funding to start or grow a business often requires exploring several sources, most of which will want something in return. Click below and start your search for a new small business grant.
For example, lenders charge interest on loans on top of collateral to secure that loan, while venture capitalists will require business owners to give up a portion of ownership in exchange for funding.
However, there’s a type of funding opportunity in which no interest is charged, no one will take your property, and no one will gain ownership of your company or control your business plan. This source is small business grants. By learning more about this popular funding option, you can determine if its right for your company.
What Are Small Business Grants?
Money is available from various organizations, including federal agencies, local governments, and private resources. These funds are in the form of loans and grants and provide funding for specific purposes. With grants, the money is given to organizations or individuals to provide them with the capital needed to accomplish specific goals. Unlike a business loan, this type of funding doesn’t have to be paid back.
While the thought of receiving free money appeals to many, in reality, it’s quite challenging to obtain these grants. It isn’t money that can be used for whatever purpose the funding recipient wants. Instead, it must satisfy the objectives of the grant providers.
If you’re lucky enough to find a grant for your small business, you’ll need to project how you’ll use the money, and the funder may set milestones for you to reach. In addition, you may be required to follow a rigorous reporting schedule.
Before pursuing a grant, you should compare available grant options. The grant organizations will publish their guidelines, which every applicant should read carefully. The grant process can be extensive, and applying to the wrong organizations will take precious time away from running your business or finding more viable funding options.
Federal Small Business Grants
When business owners explore government grant options, they often turn to Grants.gov and SBA.gov. It’s possible to find some grants using these resources. However, government grants for small businesses aren’t easy to come by, as there aren’t many available. Plus, there will be significantly more applicants than there are grants available.
While the Small Business Administration (SBA) has a section on its website for obtaining grants, it redirects users to Grants.gov. That is the central information source for current grants available.
Instead, you may have better luck with the Small Business Innovation Research (SBIR) program and the Small Business Technology Transfer (STTR) program. The SBIR is geared towards women and groups deemed to be economically disadvantaged. The STTR is open to most business owners.
For both organizations, the focus is on facilitating the sharing of research and development initiatives between public and private sectors or other research institutions. If your business concept coincides with the these organizations’ missions, they may be worth considering.
Many of these grants are for large sums of money. They can start at $150,000 and increase depending on the project and goals of the initiatives.
Small Business Grants at the State and Regional Level
State and regional governments can provide grant money to help spur business development. However, this money can be difficult to obtain, and when money is available, it requires businesses to meet the objectives or mission of the government initiatives. These initiatives are often for specific tasks that a government agency wishes to achieve.
The SBA provides some grant money, but usually to other funding organizations that are responsible for finding projects to fund. One recent example is when the SBA provided money to the Entrepreneur Fund. This organization is an approved SBA lender but has been tasked with providing capital to disadvantaged entrepreneurs in distressed areas.
The government also has initiatives to help promote exporters, called the State Trade Expansion Program (STEP). It has limited availability and is specific to certain states. However, there’s a division within the program, called the Office of International Trade, that provides assistance for exporting on a national level.
The United States Department of Commerce publishes information about grant money that may be available, but it redirects people to the System for Award Management (SAM) database. Many agencies seem to be transitioning to federal resources such as SAM and Grants.gov, perhaps to streamline access to the information.
Small business owners may find some grants available at the state level by referencing the United States Economic Development Administration, which lists resources by state.
Corporate-Style Small Business Grant Options
Many organizations provide funding to small businesses in the form of grants. For example, the National Association for the Self-Employed (NASE) awards one $4,000 grant every month to active members. Only members are eligible to receive these grants based on a needs assessment by the organization.
The credit card company, Visa, also offers grant money for small businesses, called the Visa Everywhere Initiative. The initiative sets out to challenge small business owners to find innovative ways to solve payment issues. If you run a technology company that deals with payments, this could be a good funding challenge to explore.
If your grant application is declined, you could instead consider crowdfunding. In many ways, this funding option is similar to grant programs. The crowdfunding websites are similar to foundations as they raise money to support the mission of the funder.
Crowdfunding is competitive, but if you create the right pitch, you can find people willing to fund your initiatives. The concept works by creating a campaign and offering something in exchange for the funds. For instance, when selling a book, authors can offer the book once published to people who pledge funds at a specified dollar amount. The author can also offer additional items for funding at higher levels.
Small Business Grants For Specific Demographics
Small business grants aren’t readily available to people wishing to start businesses. However, there are demographics that the government may want to promote and offer helpful resources for their businesses. Three of the largest groups are veterans, women, and minorities.
If you belong to any of these groups, you may qualify for certain government resources. However, it’s still competitive among those subsets and you shouldn’t consider these options to be easy avenues, even if you belong to these groups.
Learn more about each of these subsets in the following sections.
Small Business Grants for Veterans
While grant money is available to disabled veterans, there aren’t as many resources for all veterans. Funding is available in the form of low-interest business loans.
The United States Department of Veterans Affairs (VA) has a program for disabled veterans called the Vocational Rehabilitation and Employment (VR&E) program. To be eligible, veterans must have experienced a service-connected disability that causes employment barriers. The VA requires applicants to receive a disability rating.
The VA also offers a program for existing veteran business owners called the Vets First Verification Program. It isn’t a grant but it does provide services to veterans who own businesses. They can receive priority on contracts at the federal and state government levels, access to capital, and tax benefits. The program offers training and other resources to help these business owners learn how to manage their operations.
Another option is the Street Shares Foundation, which offers programs for veterans, including occasional grants. The company suggests veterans sign up to receive updates, or they can view the foundation website for listings. When funding is available, there are three awards given as follows:
- 1st Place – $15,000
- 2nd Place – $6,000
- 3rd Place – $4,000
Check the website for eligibility and availability of these awards.
If you can’t find grants or have been turned down, you can pursue a small business loan. To learn more, check out our educational article on how to apply for a veteran loan.
Small Business Grants for Minorities
Minority business owners have resources available to them from various organizations. For instance, the SBA offers the 8a Business Development Program.
The goal of this program is to help level the playing field for groups considered socially or economically disadvantaged. It helps by giving preference to business owners registered with the 8a program. Learn more about how to qualify and apply for this program.
The Minority Business Development Agency offers minority business owners expertise on how to run their businesses. This organization can provide tips and resources, including where to find funding sources and possible grant opportunities. The organization can also help connect small business owners for joint venture opportunities.
Other sources for grants for minority business owners are small business grant contests and local chambers of commerce. You can read more about these options from an article we published for minority business owners.
Small Business Grants for Women
Grants for women business owners are more prevalent than ever. They exist at both the government level and the corporate or foundation levels. Like most grants, however, the money won’t likely be granted for the purpose of starting a business or day-to-day operations, although exceptions exist.
Some common foundation grants include Amber Grant and Eileen Fisher. The timeframes for grants and amounts awarded vary. For instance, the Amber Grant Foundation awards $2000 every month to women-owned businesses, while Eileen Fisher has a yearly award of $100,000 that’s given to up to ten women business owners.
Women business owners can also apply for government-based grants. For instance, the SBA has several programs that can provide women with funding for their business initiatives. These may be slightly easier to obtain due to being categorized into the women subset. However, there’s still plenty of competition for these grants.
How to Apply For a Small Business Grant
Grants.gov has a step-by-step guide on how to complete the application process. Even if you decide to use corporate and private grant sources, the procedures are worth researching.
To start, follow the tutorials on how to apply for grants. This is a must-read for any small business owner seeking grant money. The website also encourages potential applicants to sign up for its newsletter and to check out their blog.
After conducting research, search for grants that may be a match for your small business. This website feature can help you filter the results. In addition, there’s an option to filter for small business grants.
When you find opportunities that you’re interested in, read the grantor’s mission statement to learn more about the funding requirements. This can help you determine your eligibility for funding. As the process is time-consuming, you’ll want to focus your efforts on grants that give you the highest chance of acceptance.
Be sure to follow all the eligibility requirements provided by the grantor, as you’ll be disqualified if you don’t follow the instructions. Also, make sure that your grammar is impeccable, with no errors on your application.
In addition, ensure that your application is entirely truthful. Although aspects like your credit scores and business sales may not be required since you aren’t repaying this funding, you should always be forthcoming on your application.
Corporate grants and foundations tend to be less stringent than government grants, which will attract even more seekers to these funding sources. However, these funders may match your business objectives more closely, which could work in your favor.
White corporate grants may be less stringent, that doesn’t excuse applicants from not following the instructions. Also, the more specific you can be with your proposal, the better.
Getting a grant for your small business may seem like a dream come true, but it’s more difficult than many realize. You may be tempted to apply for as many funding sources as possible in hopes that you’ll get approval for one. However, the lengthy grant application and interview process should discourage this practice. Focus on the funding initiatives that match your business’s goals, and consider how each grant program will help you invest in your products or services.
This article was originally published on ForaFinancial.com.