Small Business Grants: Resources For Free Money
From business loans to credit cards, it’s assumed that funding a growing small business necessarily involves taking on debt. No pain, no gain, right? Well, in the event that your business doesn’t turn a profit, you’ll be taking on the pain without seeing any resulting gain. Wouldn’t it be nice if a way existed to fund your small business based on your capabilities and not on your willingness to go into debt?
As it happens, there is one way to get funding that doesn’t rely on you taking on debt: small business grants.
Table of Contents
- What Are Small Business Grants?
- Small Business Grant Pros & Cons
- How To Find Business Grants
- 8 Places To Look For Small Business Grants
- Don’t Qualify? The Best Alternatives To Small Business Grants
- Final Thoughts
What Are Small Business Grants?
A small business grant is a sum of money — issued either by a government agency or a private organization — awarded to a growing business. While it’s tempting to think of a grant as “free money,” that doesn’t quite capture the essence of a small business grant. For one thing, when a business receives money in the form of a grant, that money always comes with strings attached. The terms of a grant are usually quite specific about how the money can be used. It isn’t like getting a loan, where you get to decide exactly how to invest your funds.
Additionally, getting approved for a grant will likely involve lots of work on your part. Grants are difficult to qualify for and applying for them involves lots of jumping through hoops. Since time is money, grants aren’t exactly free of cost. Then again, these “costs” aren’t going to imperil your credit score!
Small Business Grant Pros & Cons
|Grant Pros||Grant Cons|
|"Free" money||Long application process|
|Can lend prestige to your small business||Funds must be used in the manner specified by the grant|
Getting one grant makes it more likely you'll get others
|Most applicants for a grant won't get it|
|Grant information is always publicly available||Business grants are not always renewed from year to year|
Because grants are generally awarded based on a company’s contribution to the public good, receiving one comes with a certain degree of prestige. This prestige can help you with future grant applications — getting one grant will make your business more attractive to other grant issuers.
Of course, when you pursue grants, you need to be aware of the harsh realities. The vast majority of grant proposals are not accepted, and even if you are ultimately successful, the application process can be rigorous and time-consuming. What’s more, the money will likely be earmarked for a certain purpose. You can’t treat the money received via a grant like any other funding — you must use the money exactly as specified (or exactly as you laid out in your grant application).
The downsides of business grants don’t hold a candle to the downsides attached to other forms of business financing, however, so don’t let these challenges discourage you!
How To Find Business Grants
Business grants can be found by checking the online offerings of every level of government (federal, state, local) and by seeking out directories of private grants that allow you to search for a program that fits your mission and your business.
When searching for grant programs, narrow your search to those that pertain specifically to your business type. Since grants are often meant to incentivize social responsibility, certain businesses will be more likely to find a grant than others. A company working on a new type of water filtration system stands a better chance of scoring a grant than a vape juice maker, for example. Likewise, certain grants may be aimed at specific segments of the population. An organization might award grants specifically for women-owned businesses or veteran-owned businesses.
What To Do Before Applying For A Grant
Before you start a grant application, you should:
- Define your exact funding need; be ready to define the precise objectives a grant would help you meet.
- Create a detailed business plan.
- Gather and assemble all the business records you can from at least the last three years.
- Have your plan and records reviewed by experts, whether they be SCORE mentors or others with experience guiding business owners through the grant-hunting process.
- Consider hiring a professional grant writer if possible.
8 Places To Look For Small Business Grants
Grants.gov is the place you should go if you want to search every grant program administered by the federal government. There are 26 grant-making agencies in the federal government, and although the website feels clunky and dated, you’ll at least get to search for the sort of grant program that your particular business could qualify for.
I should warn you, however, that most of the grants offered by the federal government are medical research grants, and these are typically awarded to nonprofit organizations and, in some instances, local and state governments. This post from the Grants.gov community blog details how private businesses may be eligible for a grant from the federal government.
Your State & Local Governments
This may actually be a better place to start your grant search over the federal grant database. That’s because grant programs initiated by your state government — or perhaps your city government — stand a better chance of aligning with your business mission than a federal grant program.
Check out your local chamber of commerce for grant opportunities as well as any city, county, and state websites that might have information about grant programs. Selection may be limited depending on your location, but you may well find a grant program that aligns with your mission. Most of these programs only accept grant applications at certain times of the year, so it pays to be vigilant and check relevant websites frequently.
National Association For The Self-Employed
If a smaller grant for your small business is worth pursuing, the NASE provides grants and educational resources for small business owners. Through their Growth Grants Program, grants of up to $4,000 are awarded to small businesses for specific purposes, such as hiring employees.
To apply for a grant, you’ll first have to join the NASE. You’ll then need to detail exactly how you’ll use the funds and how the funds will fit into your overall business plan.
Along with grants, the NASE offers memberships with the following services to small business owners:
- 24/7 expert advice
- UPS and Office Depot discounts
- $10,000-$20,000 in life insurance
- Medical emergency help
- LifeLock ID theft protection
FedEx Small Business Grant Contest
The FedEx Small Business Grant Contest is a nationally prominent grant contest that has awarded over $778,000 in grant money to small businesses since its inception in 2013. Qualifying entities must be for-profit US-based businesses with fewer than 99 employees and at least six months of time in business.
The contest is held annually, with applications typically accepted starting in late February. Keep a watch on FedEx’s website to find out when you can apply. Here is a closer look at the winners of the 2019 grant contest.
USDA Rural Business Enterprise Grant Program
An endeavor of the United States Department of Agriculture, this grant program offers grants of between $10,000 to $500,000 to rural small businesses. If your business has fewer than 50 employees, takes in less than $1 million in gross revenue, and is located in a rural part of the US, it is eligible to apply. For the purposes of this program, a rural area is defined as being “outside the urbanized periphery of any city with a population of 50,000 or more.”
Rural small business owners looking to apply should do so through their USDA Rural Development state office.
Amber Grant Program
The Amber Grant program is a grant set up by WomensNet to support female small business owners. This is how it works: the program awards $2,000 to a woman-owned business every month. At the end of the year, one of the 12 monthly grant winners wins another grant for $25,000. All female entrepreneurs in the US and Canada are eligible to compete, although non-profit applications are no longer accepted.
The program accepts applications year-round, and unlike some other grant programs, the Amber Grant program makes applying as easy as possible. According to WomensNet:
Applying for the Amber Grant is easy. Don’t try to “sound corporate.” Past grant winners are women who have simply shared from the heart. Our judges are looking for passion as well as business smarts.
Visa Everywhere Initiative
The Visa Everywhere Initiative is a multi-national grant program offering grants to companies meeting the following description:
When evaluating submissions for VEI, we look for startups that have ideas relevant to Visa’s business, a product in market, traction with early customers, and early funding from external investors.
Submissions are usually accepted in the early part of the year, so keep an eye on the VEI website to look for information on how and when to apply.
The VEI also began offering a “Women’s Global Edition” program in 2019. This program is geared towards women entrepreneurs from around the globe. Its first two global finalists were awarded a $100,000 prize.
StreetShares is an online lender specializing in lending to veterans and veteran-owned businesses. The lender also has a grant program called the StreetShares Foundation Veteran Small Business Award. This program is open to any military veteran, reserve or active duty member of the Armed Forces, or a qualifying spouse.
The StreetShares Foundation has varying deadlines for the Veteran Small Business Award, so be sure to monitor the program’s website if you’re interested in applying. StreetShares gives out three grants at the end of each contest. 1st place gets $15,000, 2nd place gets $6,000, and 3rd place gets $4,000.
Don’t Qualify? The Best Alternatives To Small Business Grants
Grants are awesome because you don’t have to pay them back. Naturally, this makes them popular, but it also means most grant applicants are rejected. If you’re not successful in securing a grant, don’t despair! You’re in good company.
Of course, you’ll still need funding to launch and grow your business. Two popular ways entrepreneurs get funding for their small businesses are personal loans and lines of credit. Here are some top lenders in each field:
Personal Lenders For Business
|Lender||Borrowing Amount||Term||Min. Credit Score||Next Steps|
|$1K - $50K||3 or 5 years||8.16% – 27.99%||620||Apply Now|
|$2K - $35K||3 or 5 years||6.95% - 35.99% APR||640||Apply Now|
|$1K - $40K||3 or 5 years||5.32% - 30.99%||640||Check Rate|
Lenders That Specialize In Lines Of Credit
|Lender||Borrowing Amount||Draw Term||Draw Fee||APR||Next Steps|
|$6K - $100K||6 months||None||Starts at 13.99%||Apply Now|
|$2K - $5M||Varies||Varies||Varies||Apply Now|
|$5K - $5M||6 months||1.50% per draw||21% - 65%||Apply Now|
|$1K - $100K||12 weeks||None||12% - 54%||Apply Now|
Great business ideas can come from absolutely anybody. Unfortunately, startup capital is not so equitably distributed. Grant programs can help small business owners — particularly those who make an identifiable contribution to the grant-giving organization’s conception of the public good — with much-needed cash. Just be persistent, be undaunted by rejection letters, and be prepared to accept the strings that come attached to grant money should you be successful.