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There are many reasons to pursue small business grants. For example, you may not qualify for a traditional loan, or your cash flow may not be strong enough to handle loan payments. If you’re a woman-owned or minority-owned small business, you’ll probably also have a difficult time accessing capital through traditional lending channels.
Here’s a guide to get you started.
What Are Small Business Grants?
Small business grants might offer lower amounts of funding than business loans, but they have a significant advantage. The obvious advantage is that a grant doesn’t need to be repaid. Moreover, you’re free to utilize the cash, with no negative impact on your operating budget. These awards are helpful to entrepreneurs who experience a tough time securing loans from banks. In addition, women-owned and minority-owned businesses that face inherent biases in the lending industry also benefit from this funding.
Types of Small Business Grants
Federal, state, and local governments award funding to small businesses. Many private-sector companies and foundations manage grant programs for small businesses, some explicitly targeting minority-owned businesses.
1. Federal Small Business Grants
The best place to find government funding is by visiting the grants.gov website. Grants are available from many government agencies, including the Department of Defense, Department of Energy, and Environmental Protection Agency (EPA).
The Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs fund startups in the research and development and technology sector. This is a competitively awarded program. You must meet general SBA guidelines for small businesses and collaborate with research institutions. There are two phases to the program. The first phase of funding is $150,000. If you’re approved to move to phase two, you’re eligible for up to $1 million.
2. State And Regional Level Small Business Grants
State and regional governments offer funds to small businesses that operate in sectors deemed to be priorities. These sectors include transportation, green technology, and economic development. The best place to find and apply for state and regional funding is by visiting your state’s Department of Commerce website.
Local governments also operate funding programs. Total awards tend to be smaller. Moreover, if you can demonstrate that your business will be an economic engine, you might be a strong candidate for funding.
3. Corporate-Style Small Business Grants
Corporations like to align themselves with a success story. The corporate style application process is different from the government application. Additionally, the selection process is a bit more challenging to navigate. You’ll have a better chance of being funded if you can create a compelling pitch. This pitch should demonstrate how your success will benefit not only your consumer audience but also the consumer audience of the sponsoring corporation.
Total corporate awards can be significant, providing you with capital to grow your business. Examples include the FedEx Small Business Grant and the Visa Everywhere Initiative.
Who Can Get Small Business Grants
There’s funding specifically for women-owned, minority-owned, and veteran-owned small businesses.
Federal grants don’t specifically target women and minority business owners. However, government agencies do prioritize these businesses when it comes to making award decisions.
The SBA 8(a) Business Development Program is an initiative designed to improve minority-owned businesses’ ability to gain access to government funds. Once approved, you’re eligible to compete for sole-source contracts worth up to $4 million if you’re in the retail or service industry. If you’re in the manufacturing industry, then you can compete for $6.5 million.
Women-Owned Businesses
- 37 Angels provides seed capital to women entrepreneurs, offering funds up to $150,000
- For more options, visit GrantsForWomen.org, a database for women-owned small businesses
Minority-Owned Businesses
- The Department of Commerce’s Minority Business Development Agency (MBDA) offers funding and financing to minority-owned businesses
- Several venture capital funds have been established with a mission of promoting minority entrepreneurs. Examples are Harlem Capital Partners, Backstage Capital, DigitalUndivided, and Kapor Capital
Veteran-Owned Businesses
- Funds for veteran business owners are available through the Department of Veterans Affairs or Office of Veterans Affairs
- Warrior Rising provides grants to veteran entrepreneurs
- StreetShares Foundation gives awards up to $15,000 to veteran-owned small businesses
- The National Association for the Self-Employed Growth Grant doesn’t target veterans, but it’s an excellent resource. You must join NASE to apply. Funds up to $4,000 are available for equipment, marketing, and general operating expenses
How To Apply for a Small Business Grant?
Federal applications are time-consuming. Begin by visiting the grants.gov website. Carefully read the eligibility criteria and general application procedures. Find an opportunity that matches your qualifications. Gather all the documentation required for your application, such as a thorough business plan, accurate contact information, and financials. Pay attention to the application deadlines.
Corporate and private-sector funding depends immensely on your ability to make an interesting pitch. Be sure your business fits within the guidelines of the organization. Be concise when articulating your mission and your strategy for business success.
Conclusion
Grants are an excellent way to finance your business growth or launch your startup. The application process can be time-consuming and require more paperwork. However, it’s worth the effort.
You may also like: How Does Small Business Funding Work?
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