The world of business can be risky.
External factors - like the Coronavirus showed - might affect your small business’ progress and profitability. At other times, you just might need a helping hand to fill the cracks, financially speaking, or give your business momentum.
So, if you’ve ever found yourself hoping for some extra cash, here’s an answer for you: small business grants.
Business grants are an amazing way to start up your business, help it grow, or keep it afloat during challenging times - without having to worry about repaying the amount in the future.
Is that the definition of free money for your business? Yes, it is.
Does it come without a cost? No, it doesn’t.
Small business grants come from several sources but are also very competitive. Researching and applying for the right grant can be time-consuming. Moreover, the funds must be spent as specified by the provider - to whom you will be reporting periodically.
Does this mean you should give up on the idea altogether? On the contrary.
Starting is a huge step in the right direction and this article shows you how to do it right - as well as provides a list of the best small business grants available.
Read along to learn about:
- What Is A Small Business Grant?
- How To Apply For A Small Business Grant - 6 Practical Steps
- The Pros and Cons of Small Business Grants
- Types Of Small Business Grants
- Small Business Grants FAQ
What Is A Small Business Grant?
A grant is money that is given to a person, business or corporation from federal, state, county or local governments, or private businesses or corporations. Grants do not require repayment of any kind.
Small business grants can support a variety of industries and causes, such as research and innovation, hospitality, entertainment, art, minority entrepreneurship, COVID-19 relief, women in business, etc.
To qualify for a grant, small businesses need to meet a set of criteria placed by the grant provider. Only if they meet the criteria can small business owners apply. Once they are awarded a grant, small businesses are obliged to report back to the grant provider, as well as spend the money as the grant foresees - be it to create jobs in low-income communities, raise women quotas in business, or help the entertainment industry survive after the Coronavirus, among others.
Grants vs Loans
The most basic difference between a grant and a loan, is that a business loan needs to be repaid, oftentimes with interest. This can be tough for small business owners struggling to make ends meet, or start-ups concerned with generating cash flow.
On the other hand, meeting the qualifications for a grant is not the easiest task. Grant providers will want to make sure that you deserve the funding, while other businesses will be competing against you for their share.
Loans are another financing option to consider if you’re looking to be on the safe side of things. Microloans and Small Business Administration (SBA) loans can be of particular interest if you don’t qualify for a grant.
Microloans are loans under $50,000 with low eligibility requirements and good interest rates. Often, the same agencies that offer grants also provide loans. SBA loans, for example, have low-interest rates and long repayment terms due to the federal government working with banks to guarantee they reach the small businesses that may need them.
Keep in mind, that some loans might also work like grants, in that they don’t have to be repaid. The EIDL Advance is just one example of such loans, so keep an eye for additional ones through the same sources you’ll be scanning for grants - listed below too!
How To Apply For A Small Business Grant - 6 Practical Steps
If you’ve made it this far, you’ve probably realized that applying for a small business grant doesn’t come that easy. But like any challenge, this too can be tackled with the right guidance and attention.
These are our top tips on how to apply for a small business grant:
#1: Research Your Grants
Information is power.
As a small business owner looking at numerous possibilities, the first thing that can benefit your quest to obtain a grant is to go through articles and resources that will give you the information, answers, and tools to make the entire process easier.
Now when it comes to federal grants, grants.gov - the official federal grants portal - has a dedicated Grants Learning Center. The center provides thorough material and guidance on everything you may need to know about federal grants. This includes tutorial videos and blog posts.
Even if a regional or corporate grant is a better choice for your business, it’s still good to go through a Grants 101 course and understand the fundamentals of the grants world.
#2: Check Your Eligibility
Making sure that you meet all the requirements for a particular grant is vital, otherwise, you’ll be wasting precious time and energy.
Now, the first thing you want to do is check whether you are legally eligible for a small business grant, to begin with.
These types of grants are given to businesses in most industries, as long as they meet the size standards established by the SBA. You can use the SBA’s table of small business size standards to evaluate your business’ size, usually measured in the number of employees or average annual receipts.
The size standard frames what can be defined as a small business. Keep in mind, however, that “small” varies from one industry to another.
After you’ve done this, you can check whether you meet the qualifications for particular grants.
#3: Search For Grants
Once you’ve gotten familiar with the basics, focus on finding the right grant for your small business.
The number of small business grants available at any time is constantly changing, as grant providers add new or relaunch existing ones. It is up to you to find the most suitable grant for your business. You can start ‘big’, by going through available federal grants, or channel your search by looking for smaller, state and local options.
There are many filters you can apply to narrow your search, like looking for options within your state or region, as well as based on your industry, product or service, number of employees, etc.
An important component of getting the research part right is not just knowing which grants to go after but also which grants to avoid. Specifically, beware of scams and make sure you find legitimate grants awarded by trustworthy agencies.
#4: Bring Your Business Plan And Finances Up To Date
If your business strategy, plan, and financial numbers are outdated, now is the time to bring them up to date.
Consider this an early stage of the reporting you will have to do as a grant winner - a tryout if you will. Most agencies will demand that you have a detailed business plan and clear strategy if they are to award you non-repayable money. This also helps grant providers determine whether your business complies with the grant’s cause or objective, be that to advance research or raise employment quotas for women, for example.
Hence, it is your job to provide your small business’ history and an updated plan and strategy.
Similarly, try to address the grant’s objectives as clearly as possible and explain how your business meets the requirements placed by the grant provider. In short, explain why your business deserves to be awarded the grant and be truthful about what you state.
Your financial numbers should be just as updated as the rest of the information. If you haven’t revisited all this information since first launching your business, the time to do it is before applying for a small business grant - failing to do so could disqualify you right away.
#5: Make Your Application Error-Proof
Now, this goes without saying, but it’s so important that we must say it anyway - double and triple-check your application so that it’s impeccable before submitting.
Bad grammar and spelling mistakes are the equivalents of lettuce stuck between your teeth - you might be saying the smartest things and still lose your audience due to the distraction. You don’t want that happening with your grant application so make sure it is errorless grammatically before deciding to hit send.
Make sure to also jot down the closing dates of all grants you are applying to so that you don’t miss any deadlines. Many small business grants will require that you register and apply through the respective channel, so do allow yourself some time to get familiar with the respective platforms and take all necessary steps that will guarantee a successful application process.
#6: Follow Up
With 90% of your work done, you can finally take a breather.
The majority of small business grants give information on when the results will be out and winners announced. Others advise applicants against following up altogether, as the grant provider reaches out to them on their own.
When none of this is the case, though, you should follow up on your application much like you would a job application - make sure it was successfully received and let them know you are available to provide additional information if necessary. It doesn’t hurt to also inquire on when the winners will be announced if that information isn’t already provided.
The Pros and Cons of Small Business Grants
You might be wondering if the above steps - time-consuming as they are - are worth taking, and who can blame you? Every situation has its pros and cons and this isn’t any different.
For this reason, before jumping on our list of small business grants, get an idea of the biggest advantages and disadvantages of small business grants and judge for yourself.
Small Business Grants Pros
- Can’t stress this enough: non-repayable money. This huge pro about grants justifies the competition and the effort needed to apply because free money doesn’t come easy in this world. If your business is eligible for a small business grant, it’s better to channel some time and energy into applying than having to repay more traditional forms of funding, such as loans. They come easier, but they will keep you on your toes when it comes to repaying your obligations.
- Small business grants are only one click away. As you will see below, several free resources provide vast quantities of information and options to apply online. This includes federal and state grants, as well as corporate grants, and those directly targeting minority groups. All you need is patience and the right tactic that will lead you to use all the information to your benefit. Keep in mind that if your business qualifies for one grant, chances are there are more grants for you out there.
- The clearly outlined reporting process might sound like a con, but it is a big pro if your business manages to obtain a grant. Monthly or quarterly check-ins from grant officers to make sure that your spendings are aligned with the grant’s goals can be a great way to keep you in check and ensure that the funds are being spent appropriately.
Small Business Grants Cons
- The costs nobody mentions, your time being the most valuable. When it comes to grants, everything takes time - from the hours it will take you to find the right grant, to the application paperwork and the extra documents you may need to provide. Applications might require paperwork such as market demographics and all the ways your business meets the grant’s objectives. Even waiting for the grant approval takes time - weeks, or even months sometimes. This can be frustrating if you need the funds, but as the old saying goes - patience is a virtue.
- We said it above - the strict eligibility requirements and rules to apply for small business grants can be a real challenge, but you can also turn them in your favor. We already highlighted how important it is to check your eligibility and prepare well-thought-out applications for the grants you choose. This is your challenge. However, your competition (although tough) is also going to be working against a limited amount of time - and probably resources - to find and apply for the right grant. This means that if you put in the necessary amount of time and effort in your application, you’re already one step ahead of some of your competitors.
Types Of Small Business Grants
Knowing the different sources of small business grants can make the search process easier for you. After all, the various agencies providing them - government, corporate, or foundations, among others - differ in the requirements they place, grant sizes they provide, objectives and industries they usually support, and even the amount of competition that’s after them.
Below are the main small business grant sources you’ll come across while looking for funding.
Want a filterable spreadsheet with 130+ grants for your small business from different sources? Drop your email below to receive the document directly to your email!
Federal Grants for Small Businesses
Federal grants offer the widest pool of choices for small businesses out there.
Nonetheless, despite the number of grants, you may find that qualifying for federal funding is not the easiest task. That is because federal agencies mainly support businesses in the fields of technology, scientific research, innovation, and health.
Their grants are also meant to support several entities, including non-profit organizations, educational institutions, and even local governments. This means that along with relatively big grants to fund federal objectives comes more competition. Moreover, federal grants are usually provided once but extend over several years.
Nonetheless - if your business is involved in research, development, and science or has a focus on education, environment, or technology - then be sure to do extensive research on federal grants. Keep in mind that federal small business grants often apply on a state basis, meaning that they are distributed to states and local governments, which later determine their specific eligibility criteria.
- One of the best sources for federal grants is grants.gov - the official access point and database administered by government agencies. In addition to providing crash courses and plenty of information regarding the grant searching and application process, the website provides comprehensive information about the grants themselves, including the agency that provides the grant, the eligibility criteria, and anything else you will need to know before applying. You can filter your grant search by checking the “small business” box and then directly apply through the website - after registering with an account first, that is.
- Challenge.gov offers another comprehensive list of technical, scientific, and creative grants and competitions run by various agencies on the federal level to drive research and innovation. A simple website search through the grants and funding opportunities they offer should provide your business with some interesting choices - if that is the case, register for an account and submit your application.
- Two additional federal-level grant-funding opportunities are the Small Business Innovation Research Program (SBIR) and the Small Business Technology Transfer Program (STTR). The SBIR Program is predominantly designed for small businesses in scientific research that have commercial potential.The STTR Program is very similar to SBIR, however, it requires that small businesses cooperate with research institutions to award them funds. Momentarily, five federal agencies participate in the STTR Program.
Make sure to check your state’s Department of Energy and Department of Defense for more SBIR and STTR-specific grants. You can also download our filterable spreadsheet with 130+ small business grants!
State Grants for Small Businesses
If, during your search, you feel like you’ve hit a dead-end searching for federal small business grants, don’t get demotivated. Instead, look for grants at the state or municipal level to explore a wider variety of grants that may even be less popular among grant-seekers. This means there will probably be less competition.
Unlike federal grants, state-level small business grants focus on the specific states’ economic and social issues. For this reason, they fund a more diverse number of industries. However, every positive comes with a negative, and when it comes to state grants, they usually go hand in hand with other federal or state funds, meaning that they provide less funding, or require that you share a part of the grant’s costs.
Generally, each state has its department of commerce website or grants portal - and both can be great sources to look for grants at the state level. An even bigger plus is that many federal programs are offered in many states - often with state-specific eligibility criteria - so if you find a federal grant that you think fits your business’ industry, check if your state provides it.
Here are some places to start your state-level small business grant search:
- The Economic Development Administration (EDA) is the US Department of Commerce agency that offers grants and the necessary resources to finance and further research and innovation. The way to discover grant opportunities for your small business is by searching for your specific state agency, as they usually offer financing, office space, and assistance in recruiting employees.
- Small Business Development Centers (SBDCs) are local centers providing financial assistance for small businesses and start-ups throughout US states. The way they do that is by helping small businesses find networking opportunities and connect with business mentors and thus continue operating in a competitive market. You can access individual states’ SBDC websites and see if the right program and funding opportunity is offered for your type of business.
- State Trade Expansion Program (STEP) is another great state-level grant that provides financial awards to state and territory governments to assist them with export development. Since 2011, the STEP grant program has assisted thousands of small businesses to obtain grants and find customers in the international market. Each state has specific application processes and qualification criteria, however, so make sure to research your state-specific criteria before applying.
Corporate Grants for Small Businesses
The corporate world of small business grants and funding is another great option to finance your business. Large companies will often offer hefty sums of money to small businesses, and with less super-specific requirements than those placed by federal and state agencies. The best part is that these kinds of grants often provide prizes for second and third-place winners too, in addition to the free publicity your small business will be getting.
There is no doubt that many businesses will go after corporate funding, especially since these grant opportunities are often offered on a global scale, but that doesn’t mean there aren’t ways to gain the upper hand. For example, you could do some industry-specific research in advance for the top corporate names in your area of operation. Some companies do fund industry-specific businesses.
Also, keep in mind that some corporate-sponsored grants involve a pitch contest for businesses looking to enter the competition. A pitch contest is a competition where entrepreneurs present their business concept in the hopes of winning funding or investment capital - this is part of making connections in the business world, so don’t let it discourage you.
- The FedEx Small Business Grant Contest is a popular USA-based corporate grant awarded to small businesses. With a top prize of $50,000 and funds towards print and business services, this grant opportunity can be great, as long as your business meets all the eligibility criteria.
- The Visa Everywhere Initiative is a global innovation program that aims to motivate small businesses to give creative solutions to payment and commerce challenges. Four finalists present their solutions each year, while the program has raised over $2 billion in funding over its course.
- Nav’s Quarterly $10,000 Business Grant is a $10,000 award for small businesses, that comes with two smaller grants for runner-up businesses. The great thing about this grant is that your business doesn’t need to meet any specific criteria to apply other than signing up for a Nav account - which is free - and post your business plans in case you become a grant winner on social media. The even greater thing? This grant is awarded every quarter!
It is a good idea to bookmark these corporate funding opportunities - more provided in our filterable spreadsheet with 130+ small business grants - even if their deadline for this year has passed, as they usually open the grant competitions annually.
Demographic Specific Grants for Small Businesses
Corporations, interest groups, and even the US Small Business Administration often offer financial incentives to assist underrepresented demographics - particularly women, minority groups, and veterans.
Below are only a few of those options, but we advise further research for funding opportunities if your business belongs in underrepresented demographics.
- The Amber Grant - awarded monthly - gives a $10,000 funding to a female entrepreneur. Additionally, one of the twelve monthly recipients is awarded $25,000 in funding each year. There is a $15 fee to apply, but the application process is straightforward and you only need to fill one application form online. WomensNet, the organization that runs this grant, is an organization of female entrepreneurs.
- The Veteran Small Business Award provides up to $15,000 to veterans or their spouses owning over 50% of a business. The grant aims to inspire, educate and support veterans in their journey to start a small business.
COVID-19 Relief Grants for Small Businesses
Federal agencies, states, and even corporations created many grants and relief funds to help businesses stay afloat during the COVID-19 pandemic. However, a big part of these programs have exhausted their funds and are no longer providing financial assistance. To stay up to date with opportunities to cover some COVID-19 related costs for your small business, regularly check your state’s department of commerce website and grants portal, as well as your local chamber of commerce.
The Shuttered Venue Operators Grant is an SBA grant that provides emergency assistance for eligible venues affected by COVID-19 and that is still open to applications. Eligible applicants may qualify for grants equal to 45% of their gross earned revenue, with the maximum amount available for a single grant award of $10 million, while $2 billion is reserved for eligible applications with up to 50 full-time employees.
For more COVID-19 relief grants for small businesses, check our filterable spreadsheet with 130+ federal, state, and corporate grants!
Small Business Grants FAQ
Here are some frequently asked questions (FAQs) about the use of grants to fund your small business.
#1. What is a small business grant?
A small business grant is a non-repayable amount of money awarded to a grantee (in this case a small business) to carry out the specific project and business objectives specified by the grant provider or the grantee on their proposal.
#2. Are small business grants easy to obtain?
When free money is involved, nothing comes easy. The eligibility criteria for small business grants are usually detailed and complicated, while the competition to obtain these grants is tough.
Similarly, the application process takes up a considerable amount of time and energy, as everything about your grant proposal needs to be thought of well before applying. Nonetheless, thorough planning can be good for your business, while the big number of grants available means there is usually something for most business owners out there, if they do their research right.
#3. Where can I find grants?
Small business grants come from many sources, including federal agencies, states, corporations, and organizations. Research is the first step in determining which grant best fits your business. 26 federal agencies have grants for small businesses, in addition to state and local governments, as well as corporations.
#4. What is the size of small business grants?
That widely depends on the grant and the objectives it seeks to cover. Grants range from thousands to millions of dollars - depending on whether they are awarded for business expansion, for example, or scientific research and innovation. Grants specify the amount awarded to winners in advance.
#5. How do I apply for a small business grant?
These are the five main steps a small business is advised to follow to successfully apply and win a small business grant:
- Learn about the grant application process.
- Check your eligibility.
- Research the most appropriate grants for your business.
- Submit an impeccable application.
- Follow-up when it is necessary.