Being employed is a vital part of the lifecycle. Not only are you becoming an essential cog in the wheel that keeps the economy turning. You’re also providing yourself a much-needed income. Small businesses do a lot for the local economy and are an attractive choice if you want to be your own boss. The question is: how do you get money to start a small business? Moreover, what happens when you want to expand your small business and don’t have the funds to do it? Enter: small business grants.
If you’re unsure where to start but have a fantastic business idea, there are options available in the form of small business grants. This comprehensive guide gives you all the information you need to know about small business grants and how to apply for one. Read on to find out more.
Small Business Grants 101
What is a small business grant?
A grant is essentially “free money” given by the government to help with the cost of improving your business. Unlike business loans, you don’t have to pay the money back, but there are stricter criteria on eligibility. Different categories of grants are available, depending on if your business is a for-profit or nonprofit organization.
How do you qualify for a small business grant?
Qualifying for a small business grant can be quite tricky. There are lots of hoops to jump through to prove your business can achieve its objective with the grant money awarded. Why is this? The government knows small businesses often fail within their first five years of existence. Authorities don’t want to provide vast sums of money for something with a high risk of failure.
Of course, the bad news is that small business grants are usually not available to startups. If you need help with your startup, you may have to look elsewhere, such as startup loans. The good news is that this article will provide the necessary knowledge you need once you are set up and running. We will also highlight additional grants and services you can access.
How do you apply for a small business grant?
It’s not all smooth sailing. Applying for a small business grant takes time and effort before you are even considered. You must have a full business plan with the expected goals and outcomes you plan to achieve with the money granted. Different grants and departments that offer them require various conditions. Thus, it’s best to do your research and familiarize yourself with each process before investing your time. We provide some hints and tips on the best practice of applying for a small business grant.
Can you get a business grant for being part of a particular industry?
If you think applying for a grant is futile because there are tons of small businesses operating within the United States, don’t get too disheartened yet. Grants are available to different types of companies based on their overall goals and, occasionally, who runs the business. The advantage of having criteria for grants means a lot fewer businesses are competing for the funds. Here’s a brief list of some of the types of grants available. This list is by no means extensive; it is purely to give insight into the categories in which you can send your applications to receive free money.
- Women-owned businesses
- For-profit business
- Veteran-owned businesses
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Where can you search for and apply for grants?
There are different funding options available depending on what your business does and the industry to which it belongs. Some have more than others, and focusing on changing the environment has advantages. Here is a list of some top websites to get you started.
The U.S. Small Business Administration is an independent agency of the federal government. It supports Americans in starting, building, and growing their businesses. Not only does the SBA offer support and advice on the types of grants available. It also provides other options like small-business loans, guarantees, counseling sessions, and additional learning assistance to help you in your startup and growth periods.
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The SBA has a wealth of knowledge on its website to help you plan, launch, and manage your business. The agency offers the tools you need to understand market research, write a business plan, calculate startup costs, and fund your business. The SBA is the perfect stepping stone before searching for the grants they have available.
The agency works with different organizations to provide federal financial assistance and community resources for specific small business. The SBA also helps you apply for grants for specific business needs, including research and development, exporting, and more.
This website is the go-to place for all federal grants. With all your options in one place, you’re able to search and apply for the most relevant grants for your small business. By simplifying the grant application process, grants.gov aims to save application costs, time, and effort.
State Funding Options
Options include financing for business expansion, state credit initiatives, and more.
Small Business Investment Company (SBIC) Program
This program partners with private investment funds to support growth for small businesses. SBICs invest in small businesses in the form of debt and equity. The SBA gives information for this type of option on its website. However, it does not directly invest in small businesses in this way. Instead, the agency provides money to eligible private investors who can use these extra funds to invest further in the small companies which apply. You can find information about this option through the SBA website or by clicking on the above link.
Small Business Innovation Research (SBIR) Program
The SBIR program encourages small businesses to pursue federal research and development projects that can lead to opportunities in commercialization. The program can assist with various grants and funding options.
Small Business Technology Transfer Program
Working in a similar way to the SBIR program, the STTR requires small businesses to work with a research institution. The link provided shows which grants are available to your small business.
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What is the process for small business grant applications?
Now that you’ve chosen the grants you wish to apply for let’s discuss how you fill out the applications and how long it takes to receive your money. Here is a brief step-by-step guide so you can know what to expect at each stage:
Check your eligibility
Knowing if your small business fits the necessary criteria will save you a lot of time and effort in the long run. Don’t bother applying for anything you aren’t eligible for. The websites we have provided above will give you all the information you need on each available grant. Make sure to follow all the terms and conditions. They include your company’s size, its industry sector, and why you are applying for the grant. The terms and conditions also include how you will spend the money.
Compile your application documents
Believe it or not, choosing which grant you are applying for is not the most complicated part. The hard work comes in compiling the materials you need as part of the application process. You will need to work on a complete business plan which includes company information, your overall goal, and how you intend to use the grant. The business plan must also describe the impact your organization will make once funding has been granted. Other essential items include a full budget, additional tax documentation, certificates, and other personal information to support the application.
Stick to the deadline
Grant applications are not always open, so you must understand the timeframe you have for applying and submitting your proposals. The grant application will tell you everything you need to know, including the format and length of the plan and any signatures that are required. If you don’t adhere to the guidelines, your application may be delayed or denied.
Grants for Women
Once unheard of in the world of business, businesses set up and managed by women are on the rise. To help create more diversity in the business world, some grants are available solely for women to help reach their business goals. We’ve rounded up some of the most accessible grants available for this target group.
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The Amber Grant
Founded in 1998, the Amber Grant was launched by WomensNet to honor the memory of Amber Wigdahl. Amber died at the age of 19, unable to fulfill her entrepreneurial dreams. Each winner of the Amber Grant receives $2,000 with the chance to be entered to win an additional $25,000.
Cartier Women’s Initiative Award
The Cartier Women’s Initiative is open worldwide to help committed women entrepreneurs achieve business growth. The annual award goes to women representing the top three businesses from each of seven regions. To qualify, the company should be designed as a for-profit organization and be within an early stage of business. The business should be generating revenue from its current sales and should not have raised more than $2 million in funding.
The company should meet at least one of the United Nations’ Sustainable Development Goals (SDGs). Women should fill the primary leadership roles. The legal entry age is 18 years, and a good command of the English language is required. The evaluation criteria include:
- Financial and business model sustainability
- Leadership and character
- Quality of submission
- Commitment to Cartier Women’s Initiative
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Tory Burch Fellows
The Fellows Program is designed for women to achieve their business growth through a community of support needed to connect and learn through experience. To be eligible for this opportunity, an applicant must be a woman entrepreneur who owns a majority stake in a qualifying business and manages it on a day-to-day basis. They must be over the age of 21 and be proficient in English and a legal resident of the United States.
In addition, the business must be for-profit in the early stages. It must be generating a minimum of $75,000 in revenue and be formed and operating in the United States. Nonprofit, idea stage and subsidiary businesses are not considered.
The evaluation stage will determine 50 fellows based on the following factors:
- Personal statement and resume
- Business plan
- Social Responsibility
- Proposed use of education grant
Upon selection, up to 50 fellows will receive a four-day workshop at the Tory Burch Offices. They will also receive a one-year fellowship with the Tory Burch Foundation with access to the online peer-to-peer network. Fellows are granted $5,000 for business education, and a select few will pitch their ideas and business to industry influencers.
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Open Meadows Foundation
The Open Meadows Foundation is a grant-making organization seeking projects that promote gender, racial, and economic justice. Grant amounts are up to $2,000; small and startup organizations are given priority. Applications are accepted twice yearly in the spring and fall. All forms are taken online and take up to three months for review. The organizational budget should not exceed $75,000.
For other grants and funding available for women, grantsforwomen.org provides a handy list of available grants in your region. The website also offers essential advice for small businesses, startups, and entrepreneurs.
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Grants for Veterans
The Service-Disabled Veteran Entrepreneurship Training Program (SDVETP) is a cooperative agreement. It aims to support organizations that deliver training programs to service-disabled veterans who aspire to become small business owners.
You must register with grants.gov to complete and submit your application.
To apply, follow this link and download the PDF for full submission instructions.
Grants for Small Business Startups
You may have noticed that at the beginning of the article, we pointed out that small business grants tend only to be available for established businesses. Depending on the type of industry your business belongs to or the state in which you live, you may be able to receive some help to create your new business. We went the extra mile and found a few small business grants that startups are eligible to apply for.
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Rural Business Enterprise Grants: For Rural Area Opportunities
What is it?
This grant is designed to support “targeted technical assistance, training, and other activities leading to the development or expansion of small and emerging private businesses in rural areas.”
Small businesses with fewer than 50 employees and less than $1 million in gross revenue are eligible.
Rural public entities including, but not limited to:
- State agencies
- Nonprofit corporations
- Institutions of higher education
- Federally recognized tribes
- Agricultural cooperatives (If organized as a private nonprofit corporation)
Where must I live?
Funds must be used to benefit rural areas and towns outside the urbanized periphery of any city with a population of 50,000 or more. A list of the eligible regions is available here.
How much funding can I receive?
The is no maximum amount you can receive. The smaller the request, the higher priority it is given. Typical grants range from $10,000 to $50,000. An opportunity grant is limited to 10% of the total rural business development grant annual funding.
How must I use the grant?
Enterprise grants must be used to benefit small and emerging businesses in rural areas. Opportunity grants follow the same criteria, but they are awarded explicitly for the startup and development of new companies.
How is the application evaluated?
There is a complex evaluation process that starts with an in-depth business plan and evidence to support your application. You must be able to show that the grant money is being used to help develop the rural area and will benefit the community.
How can I apply?
The grant is open through the USDA Rural Development’s local and state offices once a year.
Little Caesars Veterans Program: Veteran-Owned Business
What is it?
The Little Caesars Veterans Program is open to those who have served their country. The program aims to provide honorably discharged veterans a chance to open their own business with a Little Caesars franchise.
Veterans of the U.S.A with an honorable discharge are eligible.
Where must I live?
Countrywide opportunities (depending on site availability)
How much funding can I receive?
Veterans can receive a reduced franchise fee for their first restaurant and various credits on equipment, marketing, and administrative services. The funding depends on the purchase of a site.
How must I use the grant?
You must spend funds on the cost of setting up your new Little Caesars restaurant.
How is the application evaluated?
Little Caesars will check eligibility upon application. Then you will be sent a Franchise Disclosure Document to sign and return. Upon receipt, Little Caesars will contact you via a franchise license advisor for another interview. After this stage, the company will tell you if you have been awarded a franchise and funding. Little Caesars suggests that the time from application to store opening will take 120 – 365 days.
How can I apply?
Follow this link.
You might be able to apply for small business grants through your state. The state’s official website should list the available options. Otherwise, check out the other options below for some additional ideas to finance your business.
Grants aren’t the only option for funding your small business. Applying for a small business loan, exclusive organization memberships, crowdfunding, and contests are also viable options. We’ve collected a few other sources of funding that can help with initial startups or already established small business needs.
How do business loans work?
You apply for business loans the same way you would ask for a grant, but the criteria for funding are less rigid. Although you can spend the funds more freely, you must have a good credit rating and pay the funds back with interest within a specific timeframe.
Can you afford a small business loan?
If you cannot apply for a grant, looking for a loan might seem like the perfect solution. You should remember that this amount must be paid back on time, either in installments or as a lump sum at the end of the loan period. If not, your business or personal assets may be at risk of repossession. You must be able to pay back the amount due each month for the duration of the loan while still affording your other business commitments. A financial statement is the best way to see your cash flow forecasts with monthly inflows and outflows to make an informed choice.
Where can I get a business loan?
There are plenty of options available for business loans. A top choice for businesses is their current bank. You can often apply via your bank’s website. If you have yet to open a business bank account, there are other options online, such as OnDeck, BlueVine, and Funding Circle.
National Association for the Self-Employed (NASE)
Grants awarded by the National Association for the Self-Employed (NASE) must be used for essential business needs such as new computers, farming equipment, and hiring.
Members of the program can apply for up to $4,000 for a specific business need. You must be a minority-owned business within the United States, become a member of NASE, and be in good standing for three months before your application.
How does crowdfunding work?
Setting up a crowdfunding page is an excellent way for potential investors to see your vision and fund your projects. There are plenty of crowdfunding websites with a lot of different services available. You will be charged a fee for the use of their services. Sometimes this fee can be upfront, so make sure you check the terms and conditions before signing up.
Kickstarter: For Creative Arts
With a mission of helping creative geniuses bring their projects to life, anyone with an idea in art, music, design, and more can join to receive help from various sources. Set goals and benefits for your investors when you hit your target amount. With a great online community and social media linkage, you can advertise your project to potential investors quickly and easily.
iFundWomen: For Women-Led Businesses
iFundWomen is one of the best crowdfunding sites designed specifically for early-stage women entrepreneurs. The site provides a full crowdfunding platform with additional coaching, either privately or through online postings. Learn new skills in marketing and creativity to push your business further.
CircleUp: For Early-Stage Consumer Goods
By providing capital for equity, credit, or both, each funding is based on an individual business need. CircleUp reports that its customers tend to be existing businesses with at least one year in operation and annual revenue of $250,000 to $10 million.
SeedInvest: Best for Entrepreneurs and Businesses
One of the leading names in crowdfunding platforms, SeedInvest offers venture capital and angel investments to anyone who wants to start their own business. Founders Ryan Feit and James Han wanted a platform that allowed others to invest in startups which had difficulty raising capital. By filling out their application form to join their platform, you are offered continued support throughout the funding process. You also have access to detailed reports about your requests.
You can also try entering competitions through private investors who will award grants to their chosen winner. Entering contests can be difficult, and that free money we’ve been talking about might not seem so free by the end of your application. You must not rush the application process, should follow all the instructions, and stick to the deadlines! Here are some of the latest contests.
FedEx Small Business Grant
Once a year, FedEx offers grants and services to the top ten businesses from their contest. The last contest had a top prize of $50,000. In addition to the cash, the winners received a credit to use for FedEx Office print and business services.
Etsy Maker Cities Grant
This contest targets creative people. It supports entrepreneurial communities by investing in innovative projects to help traditionally underrepresented groups. Maker Cities partners with Mastercard’s Centre for Inclusive Growth. The contest runs annually through Etsy. Grantees can be given up to $40,000 in direct program support and a custom-built training program. The competition is open to nonprofit organizations in the U.S. Applications are to be received by a specific deadline. A local government official must endorse applications and the business run by an Etsy seller.
Ben Franklin Technology Partners BIG IDEA contest
This contest targets new tech startups. Winners receive a cash prize, ongoing training, workspace, and consultations to grow their business ideas further. Applicants must be located within Cameron, Clarion, Clearfield, Elk, Jefferson, McKean, or Potter Counties in Pennsylvania. Pre-revenue or sales must not exceed $500,000. Only for-profit businesses are eligible.
We hope our guide has given you some insight into applying for small business grants and what options are available to you. To help bring all the information together, here are a few tips to help you through your search.
- Search for grants through the federal government, state, and local area for all your options.
- Writing a comprehensive business plan is essential.
- If your business is in a niche category, check if you can apply for specific grants for individual ventures. For example, a creative company can apply through the online homemade sales platform Etsy.
- Check the eligibility criteria before applying.
- Adhere to deadlines; there are no second chances.
- If you cannot apply for a grant this year, keep it in mind for next year. You have 365 days to write an effective business plan and get up to speed with your revenue figures!
- If you cannot apply for a grant, other options are available. Consider applying for a loan, entering a contest, or signing up for a crowdfunding website.
Have you been awarded a small business grant? Tell us about your success stories!