Everything You Need to Know About Business Grants
Running a small business isn’t always easy. Even if you provide innovative products or quality services, it can be hard to compete with the big business next door. Still, small businesses are a necessity as they often provide handmade or American-made goods, pursue societal or environmental benefits, and contribute to the overall economy.
When small businesses are struggling or have new goals they’d like to achieve, they often need monetary help. This is where business grants come in. These can be supplemental to other types of funding, such as loans, or they can be the main source of funding for a small business.
In this article, we will share everything you need to know about business grants from what they are, what types exist, where to find them, and how to get them. We’ll also explain the challenges a company may face in obtaining a grant and provide some alternatives.
What Is a Business Grant?
A grant is money given to a person or business that does not have to be paid back. This money is typically funded by the government or a private business. Even though we call them business grants, they are available for small businesses in particular and are often referred to as small business grants.
Grants are given to support specific purposes, like technological or medical research. Companies may also create grants to support business owners who fit certain criteria (such as women or veterans).
Grants can be very helpful for small businesses, but there is often a lot of competition. Furthermore, some businesses may struggle to find grants available to them.
Types of Business Grants
Now that you know what a business grant is let’s talk about the different types. These grants may be available to you depending on the type of business you run, your location, or special qualifications like gender and ethnicity.
Federal Small Business Grants
This is the most common type of business grant available to small businesses. As you can guess, these business grants are funded by the federal government. Because the federal government uses taxes to fund these grants, their requirements for eligibility can be strict.
The application process is time-consuming because the government needs to make sure the money will be used in a beneficial way and not be put to waste. Federal small business grants are typically available for businesses focusing on education, environmental research, medical research, or technology.
State Small Business Grants
Like federal business grants, your local state government may also have grants available for small businesses. State grants may be offered depending on what type of innovation the state would like to foster within its borders.
Like federal business grants, you’re likely to see grants for businesses focusing on education and medicine; there may even be grants for conservation or rural-based businesses as well. Some state grants may not be as specified as federal grants. Because of this, the competition for them is often fierce.
Corporate Small Business Grants
As you can guess, corporate small business grants are offered by large corporations. These grants don’t always have a focus in mind like medical research or technology. Instead, they’re offered to any entrepreneur with a good idea, product, or service.
It’s not uncommon for these to be offered through competitions or contests. As you can imagine, these types of grants are very competitive and may be some of the hardest to get.
Specialty Small Business Grants
Some business grants are offered to entrepreneurs who fit certain criteria, such as being a woman, a minority, or a veteran. These grants may be offered by any of the above-mentioned entities.
Their goal is to support entrepreneurs who face unique challenges that other business owners may not have to worry about. Specialty grants help to empower women, veterans, and minority groups.
Where to Find Business Grants
In order to get a business grant, you need to know where to look. Since we’ve talked about types of grants, you already have a sense of what to seek out. However, we’d like to provide more resources for you.
Small Business Innovation Research
The Small Business Innovation Research program (SBIR) offers federal and state-funded grants, mainly to businesses pursuing technological innovation. You can find these grants at https://www.sbir.gov/.
Small Business Administration
The Small Business Administration (SBA) has several grants available to small businesses. Some support businesses focused on technological advancement, some support veteran-owned businesses, and others help disadvantaged microentrepreneurs like those of Native American descent.
Check out https://www.sba.gov/ for more information.
Amber Grant
Every year, WomensNet gives out an Amber Grant (worth $25,000) to a female business owner. They also give out $10,000 per month in grant money to women-owned businesses. If you’re a woman with a business, the Amber Grant is worth checking out: https://ambergrantsforwomen.com/.
Grants.gov
Grants.gov allows you to search for available government grants. There is often a large number of grants on this website, but you can narrow your search results. This is a great resource for finding grants because it not only lists many grants but it also provides educational resources for them.
State Websites
Whatever state you live in, you should check out its .gov website. Here, you may be able to find a page about grants.
It’s also helpful to search your state’s name followed by “grants” and check out any resources that pop up from official web pages. You’ll often find that different departments of the state government (such as the DOJ or health department) will have their own pages dedicated to grant opportunities.
How to Get a Business Grant
It’s one thing to find a business grant, but it’s another to obtain one. So, how do you get one? Let’s talk about the application process, starting with eligibility.
Eligibility
Before even applying for a business grant, you should make sure you qualify to receive it. Even if the title or summary of a business grant entices you and seems like it’d be something you’d qualify for, that isn’t always true.
It’s important to read all the fine details to be sure you meet the eligibility requirements so that you don’t waste time applying for something you don’t even qualify for. If you’re certain that you’re eligible, then it’s time to apply.
The Application Process
As you’re certainly aware, the application process will be different for every business grant. Some grants might require a statistical breakdown of how you plan to use the money. Others might be simpler and want something like a video essay describing why your business deserves the grant.
However, there are three things that most grant applications will ask for: how many employees your business has, your monthly and yearly revenue, and the amount of time you’ve been in business.
Since grants are meant for small businesses, the number of employees may be a deciding factor. Similarly, it may be difficult to obtain a grant if your business makes over a certain revenue. Finally, though there are some grants available for start-ups, many are meant to support small businesses already up and running.
Of course, if you’ve read the eligibility requirements carefully, then providing this information will be no sweat for you. Once you’ve submitted your application, what’s left is a waiting game.
Challenges of Obtaining Small Business Grants
Business Grants are attractive for an obvious reason: they’re basically free money. However, for that reason, they can be challenging to obtain. Let’s talk about some challenges you may face when attempting to get a business grant.
The Process is Time Consuming
The application process can require a lot of paperwork, time, and effort. Once you’ve submitted your application, you may have to wait months to find out if you’re approved. After putting in all this time and effort, you may not even get the grant in the end.
There Is Far More Demand Than Supply
How many small businesses are looking for and applying for grants? Likely, hundreds of thousands. However, there aren’t enough grants to go around. This means there is a lot of competition, which lowers your own business’s chance of receiving a grant.
Some Grants Require Regular Updates
Though grants don’t have to be repaid, the issuer may still have expectations. For instance, the progress of your business may be monitored. If you’re doing research, you may be asked to make that research available to the issuer or other entities like the government. For some, this may not be a problem. For others, this may feel like extra work.
There May Be Strict Rules About How You Can Use a Grant
If you receive a grant from the federal or state government, you may not be allowed to use the money for things like paying back debt or covering operating expenses. Often, the money is meant to go toward research and innovation.
Alternatives to Business Grants
If you’re unable to receive a business grant or need more money than it offers, there are alternatives, such as crowdfunding and loans.
Crowdfunding
Have you ever seen a product ad on Facebook that looks amazing, but when you click the “learn more” button, you’re redirected to Kickstarter? This is a tactic that many businesses use. They use prototypes of their products in video ads to get funding from the general public.
Of course, video ads are just one technique to gain crowdfunding, and our main point here is that crowdfunding is an option.
GoFundMe and Kickstarter
The most popular websites for this are GoFundMe and Kickstarter because they allow you to raise large sums of money without needing to do anything in return for your supporters.
However, most budding businesses create tiers of goods for supporters who pledge certain amounts. It’s important to be aware that these websites may take a percentage of your donations since they provide their platform.
Patreon
Other websites are useful, too, though they have different formats. Patreon, for instance, allows supporters to subscribe for a monthly fee. You set your own tiers; members who pay a smaller amount get fewer perks and vice versa.
However, Patreon’s format means supporters expect to gain something in return for their monthly subscription. Therefore, if you’re working on developing an innovative product, then you may want to give supporters exclusive behind-the-scenes info about its development.
Ko-fi
Ko-fi is another website where supporters can donate to a cause. They either make one-off donations or subscribe for a monthly fee. You can also set monetary goals and state what your purpose is.
Ko-fi allows you to set up a shop to sell goods and take commissions for services as well. It may not be the best option for a small business that needs to make tens or hundreds of thousands of dollars, but for a single-person business selling handmade goods, it’s a great option.
Small Business Loans
Though crowdfunding may be a preferable alternative to a business grant because it does not have to be paid back, it isn’t always reliable. It may be difficult for a crowdfunding campaign to gain enough traction to make the money you need.
This is where loans come in. There are many companies that provide loans to small business owners. The tough part is sorting through them all and finding ones with the best interest rates.
Just make sure that you take out enough money to meet your goals. If you don’t, you may not achieve what you set out to do and acquire enough company revenue to pay back the loan.
Grants 101
Business grants are very attractive because they provide funding that does not have to be repaid. Of course, grants are meant for small businesses that need help with growth, not for corporate giants.
There are a few different types of grants, such as federal, state, corporate, and specialty grants. These types are either provided by specific entities such as the government or a corporation, or they have specific requirements about who can receive them.
There are numerous grants available and plenty of great websites to look for them on. Of course, obtaining them isn’t always easy. The application process is long and involved, and you may not end up getting every grant you apply for (or any of them).
If you’re having difficulty receiving a grant or just need alternatives, you can look to crowdfunding and small business loans. Like grants, crowdfunding allows you to receive money that doesn’t have to be paid back. Money earned in crowdfunding campaigns is typically donated by the public.
Crowdfunding campaigns aren’t always reliable, though, so you can always take out a business loan. Obviously, you’ll want to search for those with the best terms and rates.
As you can see, there are many ways to fund your business. Grants are one of the best since they provide a considerable amount of money that does not have to be paid back.