How to Get a Small Business Grant
Free money is a dream come true for most small business owners, and the best way to receive free funding for your business is through small business grants. From government sources to corporations, there are a variety of resources available for small businesses interested in applying for grants. Read on to learn more about how you can get free money through a business grant.
What Is a Business Grant?
A business grant is a sum of money awarded by a government institution, corporation, or organization to small businesses to contribute to a variety of business expenses. The benefit of business grants is they are essentially free money for your business, meaning you do not have to pay the money back that you receive.
Business grants are highly competitive and require an intensive application process of businesses that meet the qualifications; however, if you’re able to acquire a grant, it is a great way to financially support your existing business or start a new business.
Can You Get a Grant to Start a Business?
While many small business grants are reserved to support existing businesses, there are startup grants available to aspiring entrepreneurs. If you haven’t started your business yet and are in need of funding to get it off the ground, startup grants are an excellent way to request the funding you need to achieve your business goals.
Types of Business Grants
Federal Small Business Grants
Federal small business grants are the most common type of grant and the most abundant. However, they are also one of the most competitive grants to apply for. The best candidates for most federal grants are businesses that specialize in education, medical research, or technology.
State Small Business Grants
There is also a myriad of small business grants at the state level. From businesses that are especially innovative to rural-based businesses, state government-awarded grants offer grant options for a variety of businesses. However, they are also fairly general in terms of who can apply, which means competition will be fierce.
Read our list of the best federal and state small business grants.
Corporate Small Business Grants
Large corporations, such as Visa and FedEx, flex their philanthropic muscles as well by offering grants to small businesses that can award hefty sums to the winners as well as potential industry connections. Application processes for these grants can come in the form of a traditional application, pitch competition, or other contest, so you’ll need to be ready to develop a strategy that will make your business stand out from the competition.
Read our list of the best corporate small business grants.
Specialty Small Business Grants
Women, veterans, and minority-owned businesses are the focus of specialty small business grants. These grants were developed to give financial support to communities that face unique challenges with funding their small businesses.
Where to Find Small Business Grants
Unfortunately, finding small business grants is more difficult than simply doing a Google search. However, there are a few resources that you can use to find the most recent updates on small business grants and do research to identify grants that your business may qualify for. Here are some resources to get started finding the small business grant for your needs:
How to Qualify for a Small Business Grant
Qualifications for small business grants vary based on the grantor and the type of grant. However, there are some general guidelines for how you can qualify for certain types of small business grants as well as information you should expect to include in the application process, such as:
- The number of employees your business has: Typically, small business grants 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 a small business grant.
- 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, each type of grant will have its own set of general requirements:
- Federal and state grants are often awarded to businesses focused on education, medical research, environmental research, or technology.
- Corporate grants vary based on the corporation; however, most of these grants are awarded to innovation-focused businesses or businesses that align with their company goals, such as sustainability.
- Specialty grants are typically reserved for women, veterans, and minority-owned businesses.
- Startup grants are awarded to small businesses that haven’t been established yet and are typically given to startups with an innovative business idea and potential for rapid growth.
How to Apply for Small Business Grants
Once you’ve established the grant(s) your business may qualify for, it’s time to start applying. As with the qualifications for small business grants, the applications vary on a case by case basis. Fortunately, there are a few ways to prepare yourself to successfully apply for your small business grants of choice:
Make Sure You Have a Business Plan
If you don’t already have a business plan, get started on making one now because it is absolutely essential to the success of your small business. This roadmap to the first years of your business and its milestones will be a crucial element when applying for small business grants because it gives the grant issuer an idea of the trajectory your business will take and when its goals will feasibly be reached.
The more you know about the application process, the better chance you have at getting the grant money you need. Thorough research of the application process, the grantor, previous winners, and the requirements upon receiving the grant will give you an upper hand during the application process. You will also have a better understanding of whether this grant is the right choice for you.
Choose the Best Grant for Your Business
Small business grants often come with stipulations and rules you have to follow if you receive the money. For this reason, it’s a good idea to be sure that the grant you’re applying for is the best grant for your business and its financial needs.
Check Your Eligibility
Be certain you are eligible for the grant you’re applying for. The reason being, your chances of your business being selected to receive the grant are far more likely if you closely align with the qualifications. Applying for small business grants is a taxing, time-consuming process, and as a busy small business owner, it’s important to spend that time applying for grants that you have a fair shot at winning.
Organize Grant Application Materials
Organizing your grant application materials is important, not only so you don’t miss any important parts of your application, but also to ensure your application is easily processed. The last thing you want after completing the application process is for your application to be overlooked for being disorganized or incomplete.
Closely Follow the Application Instructions
Take your time and follow the application instructions to be certain you’ve successfully completed each section and requirement. Often, if a small business grant application is incomplete or incorrectly completed, it will not be processed and will either be rejected or will cost you more precious time getting the funding you need to support your business.
Alternatives to Small Business Grants
If you can’t find a small business grant that suits your business or if you don’t have the time to commit to the application process, there are alternatives for you to source funding. A few of the most common alternatives to small business grants are:
- Small Business Loans: Like small business grants, loans are awarded to business owners by outside lending institutions or banks. The key difference is that you must repay business loans.
- Friends and Family Loans: Many small businesses use friends and family loans to start or support their businesses. To avoid tarnishing your close relationships, it’s recommended that you develop a solidified repayment plan and get your agreement in writing.
- Personal Savings: Otherwise known as “bootstrapping,” most entrepreneurs will dip into their personal savings to start or support their small business. This method requires self-discipline and financial commitment to be sustainable.
- Investors: Venture capitalists and angel investors are two of the most common investors for small businesses. Both invest money in a business with the hope of a high return on investment; however, venture capitalists typically request to be on the board of directors or to acquire partial ownership.
- Business Line of Credit: Similar to a personal credit card, a business line of credit is a fixed amount of money available for business expenses that is revolving upon repayment of the existing balance.
- Crowdfunding: Crowdfunding has become an increasingly popular method of raising funds for small businesses. The benefit of this alternative is that crowdfunding is a culmination of several small sums that recipients typically don’t repay.
Business grants are essentially free money for your company. Grants are typically awarded by government institutions, corporations, or other organizations. If you meet the qualifications to be awarded one, you do not have to repay the grant funding.
The first step to get a grant to start a business is to find startup grants and verify your eligibility. It’s important that you look for startup grants with qualifications that you can easily meet. Next, complete the application process.
The qualifications for small business grants vary based on the type of grant and the grantor. However, a few factors that can affect your eligibility are the number of employees you have, your monthly and yearly revenue, and how long your company has been in operation.
It is far easier to get a small business grant that is specialized. Grants with broad requirements attract more applicants and are therefore more competitive. Finding a grant that aligns closely with your company will increase the odds of you receiving the grant.