How to Get Free Money for Your Business
Small business grants, unlike business loans, are essentially free money for your business. Typically issued by government institutions, corporations, or other organizations, small business grants are a great resource for entrepreneurs to get funding that they don’t have to pay back.
Recommended: Read our review of the best small business grants.
What Is a Small Business Grant?
Unlike small business loans, small business grants are business funding that you aren’t obligated to pay back. Grants are typically issued by government institutions or other organizations and have strict requirements to qualify. These funding sources are highly sought after by small businesses making the application extremely competitive and requires a substantial time commitment to complete. However, if your business does qualify for a small business grant, the time is absolutely well spent.
How Do Small Business Grants Work?
The grants are obtained through a competitive application process and only issued if your business meets the qualifications and fulfills all the requirements. The greatest appeal of grants is that business owners do not need to pay back to the funding source. However, there are typically stipulations that designate how you spend the money within your business.
For example, if your grant is to fund technological research, you cannot use the grant money to supplement payroll or any other business expenses. Otherwise, the provider may require you to pay back the full amount of the grant.
Small Business Grant Pros
- You do not have to pay them back. Once you’ve qualified for and received the grant, the money is yours so long as you follow the stipulations and requirements of the grant.
- They are super easy to find online. You don’t have to search high and low to apply for them; you can easily find them through a quick online search cost-free.
- There is an increasing number of grants available. In recent years, the amount has grown, making it a little less competitive to get a grant of your own.
Small Business Grant Cons
- The application process can be taxing. It is challenging to obtain, as there are specific requirements your business has to meet during the application process. Additionally, applying for it can be extremely time-consuming due to the amount of paperwork required to apply.
- There may be strict requirements for how you spend the money. This type of funding often comes with guidelines for how businesses spend the money, so you cannot use it to cover other business expenses.
- Government grants can be unattainable for certain businesses. Unless your business is a nonprofit or focuses on education, medical research, or technology, finding a government grant can be difficult.
Alternatives to Small Business Grants
These grants aren’t the right funding source for everyone. Fortunately, there are plenty of other options available to finance your small business:
Types of Small Business Grants
Depending on the type of business you’re operating, there may be a few different types of grants you can apply for. Government grants can be difficult to obtain if you aren’t in medical research, education, or technology. Fortunately, there are several other types of business grants available for various business types.
Read our full review of the best small business grants.
Federal Small Business Grants
Federal grants make up the lion’s share of grants available to small businesses. The process of applying can be time-consuming, but it is worth it if you qualify for funding through this channel. The most likely candidates to successfully obtain a federal grant focus on education, environmental research, medical research, or technology.
State Small Business Grants
There are also grants available at the state level. They range from grants for innovation-focused businesses to grants for rural-based businesses. However, since many of these grants aren’t particularly specialized, the application process can be fairly competitive.
Read our list of the best federal and state grants.
Corporate Small Business Grants
Some large corporations, such as FedEx or Visa, offer them to support entrepreneurs. If you compete and win grants offered by large corporations, you can often get large sums of money to put toward your business needs. However, this means competition for these grants is fierce, so whether it's a contest or a pitch competition, you’ll need an effective strategy to compete.
Read our list of the best corporate grants.
Specialty Small Business Grants
Intended to make entrepreneurship attainable for all demographics, private companies, organizations, and the US Small Business Administration (SBA) provide specialty grants that support specific communities. Small businesses owned by women, minorities, and veterans may qualify for specialty grants.
Grants for Women
Securing funding for any small business can be a challenge, and unfortunately for women-owned small businesses, the challenge can be even greater. The grants make securing funding for women-owned businesses easier. From grants for female-owned small businesses that contribute to positive change to jewelry makers, there are a variety of them available from organizations intended to empower female entrepreneurs.
Read our list of the best grants for women.
Minority-owned businesses are an essential part of the American fabric; however, this demographic of entrepreneurs often face a unique set of challenges, including securing funding. Fortunately, many organizations and agencies offer resources to help financially support businesses such as innovative Black-owned startups or Native American projects and organizations.
Read our list of the best minority grants.
Grants for Veterans
For veterans who have started businesses after serving our country, there are various well-deserved grant options available. From grants to get their business started or provide support after they’ve begun operating, there are many potential funding opportunities for veteran-owned small businesses that qualify at every stage of operation.
Read our list of the best veteran grants.
How to Qualify for a Small Business Grant
Unfortunately, there isn’t a catch-all approach to qualifying. Each grant has a different set of requirements that your small business will need to qualify for in order to compete. The good news is that there are a few general requirements that you can expect for most of them:
- The number of employees your business has: Typically, they pertain to businesses with few employees.
- Your monthly and yearly revenue: If your business makes over a certain amount monthly or yearly, you may have trouble securing it.
- The amount of time you’ve been in business: While there are grants that apply to starting a business, many are reserved for businesses already in operation.
In addition to these requirements, you will need a myriad of additional information to qualify your business, such as an analysis of your business’s development or outside experts. These requirements will be unique to the grant and the organization issuing it.
Read our full guide on how to get a small business grant to learn more about qualifications.
How to Apply for Small Business Grants
The first step to apply for it is to find a grant that you think your business may qualify for and thoroughly review the application requirements. As with the qualifications, applying for grants varies depending on the organization, company, or government institution and which grant you’re applying for.
There are a few general things to keep in mind prior to applying:
- Conduct thorough research.
- Check your eligibility.
- Follow application instructions closely.
- Make sure you have a business plan.
- Organize grant application materials.
The process for applying for it is often complicated and time-consuming. However, if you think your business will qualify, they are worth investing your time and energy into.
Read our full guide on how to get a small business grant to learn more about the application process.