Автор: If you own a small business or are planning to start one, you have a number of options for securing funding. While taking out a loan may be the first idea that comes to mind, you could be overlooking another possibility: cash grants from the federal government, state or local government, or private companies. While grants can be much more competitive and difficult to obtain, unlike loans they don’t have to be paid back. Here is what you need to know about getting approved for one.
Key Takeaways
- Small business grants, unlike loans, do not normally need to be paid back.
- The federal government, state and local governments, corporations, and nonprofits can all be sources of grants.
- Grant programs tend to have very specific criteria, so it’s important to know what they’re looking for and whether your business appears to be a good fit.
- Grants are highly competitive and applying for one can represent a significant time commitment.
Types of Small Business Grants
Small business grants are available from a variety of sponsors. Three major sources are the federal government, your state government, and certain corporations.
Federal Small Business Grants
The U.S. government provides grants and loans to small businesses through many different departments and agencies. The website Grants.gov is a centralized resource where you can learn about many of them, search for ones you might be eligible for, and submit your applications. Major federal grant sources for small businesses include:
U.S. Small Business Administration (SBA). Best known for the SBA loan program, through which it backs loans to small businesses made by private lenders, the SBA also has a limited grants program. While it notes that it «does not provide grants for starting and expanding a business,» its Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs «encourage small firms to undertake scientific research that helps meet federal research and development objectives and have a high potential for commercialization if successful.»
In addition, the SBA funds the State Trade Expansion Program (STEP). STEP provides money to states and U.S. territories, enabling them to offer grants and other financial assistance to small businesses looking to export internationally.
U.S. Department of Health and Human Services (HHS). The Department of Health and Human Services Office of Small and Disadvantaged Business Utilization (OSDBU) provides grant money to small businesses that meet its criteria. Its programs are intended to help small businesses compete for federal contracts, with a focus on socially or economically disadvantaged people (the 8(a) Business Development Program), historically underutilized business (HUB) zones (HUBZone Program), and women-owned businesses (the Women-Owned Small Businesses (WOSB) and Economically Disadvantaged Women-Owned Small Businesses (EDWOSB) programs, among others. Including its small business programs, HHS says it «distributes the largest amount of grant funding of any federal agency.
U.S. Department of Agriculture (USDA). The USDA funds a wide range of financial assistance programs for farmers, ranchers, and other agricultural producers, directly or indirectly. The USDA Rural Development Business Program, for example, partners with lending institutions and community-based organizations to provide grants, loans, and loan guarantees to individuals and businesses in rural areas.
Again, you can find out about all these programs and many others at Grants.gov.
State Small Business Grants
State and local governments can also have grant programs for small businesses, drawing on federal funding, their own resources, or some combination of the two.
The U.S. Department of the Treasury’s State Small Business Credit Initiative (SSBCI), for example, provides funding to states, territories, and tribal governments, which they in turn use to support small businesses through cash grants and other means. Ohio, for instance, announced in late 2022 that it was in line to receive up to $182 million in SSBCI funding.
Oregon’s Export Promotion Program, partially funded by the federal SBA’s STEP program, provides grants to small businesses so that they can participate in international trade shows and trade missions.
To find grant possibilities in your state, two good resources are the Council for Community and Economic Research’s State Business Incentives Database and the Small Business Development Center serving your area.
Corporate Small Business Grants
Some corporations, as well as nonprofit organizations, also provide grants to small businesses. In addition to the money, many of these programs offer mentoring and other benefits for the winners. A few examples:
The Amazon Business Small Business Grants program, for example, makes grants to small business customers with no more than $1 million in annual revenue. Like many grant programs, this one is extremely competitive. For 2023, it planned to award a total of 15 grants, ranging from $15,000 to $25,000; in 2022, it received more than 19,000 grant applications.
The FedEx Small Business Grant Contest awards grants to a limited number of U.S. small businesses «to be applied towards growing or enhancing their business.» To be eligible, the business must be a FedEx customer with a valid FedEx business shipping account number and fewer than 99 employees. For 2023, it made 10 awards.
Visa’s She’s Next Grant Program offers $10,000 grants to 60 Black women-owned businesses in six U.S. cities. The company is also a sponsor of similar grant programs in several other countries.
As with state-funded grants, a good place to start in looking for corporate or nonprofit grants would be the SBA-sponsored Small Business Development Center serving your area.
Most 7(a) SBA loans have a maximum amount of $5 million.
Qualifying for Small Business Grants
As noted in the sections above, grants for small businesses are highly competitive and often limited to a certain type of business or business owner. So your first step in qualifying for a grant is to narrow the list to grants with criteria that seem a good match.
Having done that, you’ll want to take a careful look at the application for each grant program, spend the time to fill it out thoroughly, and make sure you supply any documents or other backup that the application asks for. With so many applicants for a limited number of grants, you don’t want to be ruled out simply on a minor technicality.
Some grant programs also profile past winners on their websites. This can give you a better idea of what the administrators are looking for and allow you to position your business accordingly.
How to Apply for Small Business Grants
The first rule in applying for a small business grant is to check on any deadlines. Some programs accept applications throughout the year, while others may have annual or quarterly deadlines.
While you shouldn’t rush yourself in filling out your applications, it is in your best interest to get them in as early as possible. Most grant programs have a limited amount of funds and may stop even reviewing applications once the money is exhausted.
Grant writing, as applying for grants is called, is a craft in its own right and a full-time profession for some people. If you’re coming at it for the first time you’ll find a lot of useful how-to information in books and online. For example, Grants.gov has a blog devoted to helpful grant-writing tips.
Among them: try to put yourself in the place of a person reviewing your application and enlist some capable proofreaders early in the process not only to spot typos but to point out any issues of logic or structure that may be interfering with your message.
Who Is Eligible for U.S. Business Grants?
To be eligible for U.S. business grants, a business must already be in operation and also must have (1) taxes in good standing and no outstanding tax amounts or liens; (2) an owner who is the majority owner of the business as well as the decision-maker; (3) a business owner who earns their main income from this business, and (4) an owner who can prove their eligibility by providing government-issued identification.
Can You Borrow Money From the Government to Start a Business?
Yes, you can borrow money from the government to start a business through the U.S. Small Business Administration (SBA). The SBA offers many different loans with different requirements, most stipulating that a business must already exist.
What Is the Disadvantage of a Grant?
The primary disadvantage of a business grant is that the money needs to be used in a very specific way; you can’t use the money in any way you please. However, this is not typically a disadvantage because when you’re applying for a grant, you know why you are applying and what the money will be used for, and that will determine whether or not you will receive the grant, based on the grant donor’s requirements.
The Bottom Line
Grants are basically free money and worth pursuing if you believe your small business fits the precise criteria for them. Bear in mind that even in that case, grants are extremely competitive, so you’ll want to have other funding sources in mind, as well.
