One of the easiest and most cost-effective ways to raise capital for your small business is to apply for a grant. If you are struggling to obtain necessary funding to start your business, a small business grant can provide you with the opportunity to bring in some (limited-strings-attached) cash.
And, unlike a loan, you don’t have to pay a grant back. This also means you don’t have to pay interest.
In other words, a grant is free money. Who doesn’t love free money?
Although the money can be free to use as needed (within reason), most grants have requirements your business must meet to be eligible. This ensures that grants go to the businesses in need. Furthermore, this allows the grant-givers to distribute the grants to those they believe contribute positively toward society/their passions.
In addition to this, many grants are provided by the federal government. These are some of the harder grants to obtain. This is due in part to their more stringent specifications, as well as their narrowed scope of preferred services and business model.
With federal grants, there are also often stipulations that apply as to how businesses can use their money. Some may require the funds go only toward labor and materials cost, outreach, or essential programs. Others may dictate specific places the funds can’t go, such as office parties and corporate retreats.
However, there are still many opportunities for small business owners to apply for grants of various designs and rewards.
Where can I get a grant for my small business?
Although grants may seem hard to come by initially, there are plenty of federal programs that provide small business owners with an opportunity to apply and qualify for various grants.
Catalog of Federal Domestic Assistance (CFDA)
The CFDA is a good place to start in your search for grants. The database provides individuals and organizations of various sizes with a list of federal programs that offer grants to suit a variety of situations. Many of these will not be available for small business owners; however, for the tenacious, it is possible to find a few grants your situation or service may qualify for.
This is the official grant-giving side of the United States government. This program provides individuals and organizations with the ability to search a vast database that comprises all 26 federal grant-giving agencies, such as the Department of Defense, the Department of Commerce, and the Department of Education.
Key features of this website include searching by keywords and specific criteria, the ability to apply online, and a built-in tracking system to check the progress of your processed applications.
Small Business Innovation Research (SBIR)
The Small Business Innovation Research program was instituted by the Small Business Administration (SBA) to provide large grants and other awards to small businesses with a focus on research and development. These types of grants are provided to organizations that look to develop innovative technological products. Some businesses that have received these types of grants recently include:
- Mosaic Materials, Inc.
- Awarded $756,756 by NASA (National Aeronautics and Space Administration)
- Funds were then used to further research and technological innovation under a business plan designed to create efficient prototypes of innovative technologies. These technologies are intended to be used to support future life applications and processes on Mars.
- X-Wave Innovations, Inc.
- Awarded $749,000 by NASA
- Funds were then used to create an ultrasonic wireless sensor network for data communication and structural health monitoring.
- X-Wave Innovations also received a Department of Energy grant to continue the development of their wireless sensor system for purposes of long-term internal monitoring of dry-storage casks containing spent nuclear fuel.
Depending on where you live, you may qualify for a local government grant designed to provide financial assistance for small businesses in your location or area of expertise. These grants may be awarded at the city, county, or state levels.
Small business-specific grants
These grants are designed especially for small businesses that cater to specific demographics, special services, or other qualifying factors. Typically, these grants are small, often running less than $2500. Some of the more well-known small business specific grants include:
- Amber Foundation Grant. This grant was started in 1998 for the purpose of helping women start their own companies. The price tag of these grants usually runs less than $1000. The Amber Foundation Grant typically requires that small businesses spend this money on essential business expenses. Such qualifying purchases include equipment upgrades, website fees, and other small purchases.
- Business Owners’ IdeaCafe Small Business Grant. This grant goes to the business that offers the most innovative ideas, as defined by an internal set of regulations. The reward for winning the grant is $1,000 for business expenses and $500 in advertising credit.
- Intuit Love Our Local Business. Intuit (makers of TurboTax and Quickbooks) hosts this monthly competition for small businesses. The company randomly selects three businesses from a polling-type format. In order to qualify, business owners must nominate their own business before the random drawing takes place. The drawing structure is as such:
- The company awards nine $25,000 grants.
- From among these nine winners, one is chosen to win a grand prize grant of $50,000.
- Among the three finalists in the selection process, a judge will choose the business that is “most loved by its customers, vendors, employees, or local community.”
- FedEx Small Business Grant Contest. This is an annual contest that provides 12 finalists with grants worth over $15,000.
- 10 Bronze prize winners will receive $15,000 plus $1,000 in FedEx Office Services.
- 1 Silver prize winner will receive $30,000 plus $5,000 in FedEx Office Services.
- 1 Grand prize winner will receive $50,000 plus $7,500 in FedEx Office Services.
Important information to know when applying for grants
Before you put a bunch of time and energy into the search process for the right grant for your business, it’s important to understand the exact qualifying criteria grants seek. There are many businesses that don’t and may never qualify for a grant. If this is the case, these businesses will have to apply for loans or raise capital through other means.
Federal grants especially are more selective in their choices. However, they still provide small business grant opportunities for the following business types and owners:
- Innovators in technology and industry
- Green businesses / environmentally-friendly or focused businesses
- Rural businesses
- Women, veteran, and minority-owned businesses
- Qualifying nonprofit organizations
Once you have found a grant that you qualify for, it’s crucial to gather all necessary information before you apply. For instance, you’ll need to have all of your business information together to fill out the required fields. Furthermore, you’ll need to complete your application by the deadline, lest you miss your opportunity to apply. You should also keep in mind that grant applications can take several weeks to process. Therefore, it’s wise to have the application filled out before you have an immediate need.
Many organizations also offer workshops or conferences designed to help small business owners learn more about the process of obtaining grants. These events are great opportunities to connect with the grant writers and funders who will source the grants, as well as other individuals and companies who have qualified in the past or may qualify now. It is always beneficial to make a good first impression on the grant providers if you meet them in person.
A final word on small business grants
If you feel as though the grant finding process is too strenuous or time-consuming while you are trying to manage your business, there are many third-party organizations available to assist you in your search. These organizations specialize in grant-writing classes and/or writing the grant proposals themselves. Regardless of how you approach the process, as long as the proper time and energy is afforded the project, you can (hopefully!) obtain the funds that will have a positive impact on your business’s operations and community service.