For example, your lender will charge interest when you take out a business loan. When seeking investors, many will require that you give up a portion of your company ownership. However, there's a funding opportunity in which you won't have to make interest payments, and you'll maintain complete business ownership. This source is small business grants. By learning more about this popular financing option, you can determine if it's right for your business or nonprofit organization.
What Are Small Business Grants?Money is available from various organizations, including federal agencies, state and local governments, and private resources. Federal grant programs award money to organizations or individuals that need capital to accomplish specific goals. Unlike a business loan, this type of funding doesn't have to be paid back by the borrower. While the thought of receiving free money appeals to many, it's pretty challenging to obtain these grants. It isn't money that the recipient can use for any purpose. Instead, it must satisfy the objectives of the grant providers. If you decide to apply for a grant for your small business, you'll need to explain how you'll use the money. In addition, you may need 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 application process can be extensive, so you should avoid applying for grant programs if you won't qualify.
Federal Small Business GrantsWhen potential grant recipients explore government grant programs, they often turn to Grants.gov and SBA.gov. Unfortunately, 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) and Small Business Technology Transfer (STTR) programs. The SBIR provides grant money to women and groups deemed economically disadvantaged. The STTR is open to most business owners. The focus is on both organizations' research and development initiatives between public and private sectors or other research institutions. If your business concept coincides with these organizations' missions, they may be worth considering. Many of these grants come in 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 LevelState and regional governments can provide grant money to help spur business development. However, this money can be challenging to obtain. Plus, when funds are 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 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 that provides 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. This program helps with exporting on a national level. Small business owners can research programs available at the state level by referencing the United States Economic Development Administration.
Corporate Small Business Grant OptionsMany 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. Visa also offers grant money for small businesses, called the Visa Everywhere Initiative. The initiative provides funding to small business owners who present 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. FedEx offers another popular grant program; the FedEx Small Business Grant provides a grand prize of $50,000 to three winners and another $20,000 to 7 winners. The 2022 Small Business Grant Contest entry period has ended, but check out the program next year!
Grants for Business Owners Affected by the COVID-19 PandemicDue to the COVID-19 pandemic, many business owners required financial assistance to keep their doors open. Many of these federal government grant programs are no longer accepting applicants. However, some programs may reopen, depending on future conditions. For example, the Shuttered Venue Operator Grant provided over $16 billion in COVID-19 relief to shuttered venues. Currently, the SBA is no longer accepting applications.
Small Business Grants for Specific DemographicsSmall business grants aren't readily available to people wishing to start businesses. However, there are demographics that the government may want to support. Three of the largest groups are veterans, women, and minorities. Learn more about each of these subsets in the following sections:
Small Business Grants for VeteransWhile grant money is available to disabled veterans, there aren't as many resources offered for all veterans. Funding is available in the form of low-interest business loans. Below are a few funding programs for veterans:
- Vocational Rehabilitation and Employment (VR&E)
- Vets First Verification Program
- The Street Shares Foundation
- 1st Place – $15,000
- 2nd Place – $6,000
- 3rd Place – $4,000
Small Business Grants for MinoritiesMinority business owners have resources available to them from various organizations. For instance, the SBA offers the 8a Business Development Program. This program aims to help level the playing field for socially or economically disadvantaged groups. It helps by giving preference to business owners registered with the 8a 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 EntrepreneursGrants for female entrepreneurs are more prevalent than ever. They exist at both the government level and the corporate or foundation levels. Although there aren't many grants for women starting a business, exceptions exist. Some popular grant programs for women in business include:
- Amber Grant: The Amber Grant Foundation awards $2000 every month to women-owned enterprises.
- Eileen Fisher: This program has a yearly award of $100,000 given to up to ten women business owners.
- SBA programs: Women business owners can also apply for government grants. For instance, the SBA has several programs that 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.
- Cartier Women's Initiative: This grant program is open to women-owned businesses that impact social or environmental causes. The current application window will last from May 16th until July 14th.
How to Apply for a Small Business GrantApplying for a business grant can be daunting, so we suggest following the steps below:
- Research Your Options
- Identify Opportunities
- Determine If You Qualify