Launching or expanding a small business can be expensive, and you can take several financial routes to secure funding. For many small business owners, government grants are desirable. Federal, state and local governments offer various grants to help small businesses launch, grow and develop. We’ll explore the best government grants, explain how to apply and share tips to help your business secure grant funding.
A small business grant is essentially free money given to entrepreneurs or small business owners to help them start a business or expand their organization. Unlike loans, you don’t have to pay grants back. However, they often come with restrictions on how you can spend the money.
Grants may be free money but they’re not easy to secure. Applying for a grant takes time and preparation. They’re also highly competitive, so small businesses should only apply for grants for which they’re eligible.
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Small businesses can seek various grants, including private grants from corporations and grants from federal, state and local governments. Grants are also available for specific industries and demographics. For example, minority business owners can seek specific minority-owned business grants.
Grants and loans are both ways to fund your business. Here’s how they compare:
Government grants are a desirable source of funding for many small businesses. You can find government grants via the following resources:
These aren’t the only government grant resources. Businesses should explore every governmental tier ― federal, state and local ― to find the best grants.
Here are some well-known government grants for which your business may be eligible.
The SBIR and STTR programs are some of the best government grants available to for-profit small businesses specializing in science and technology innovation. They are highly competitive and incentivize small businesses to conduct research and development in the hopes of eventually commercializing their product. In addition to funding, these programs also offer opportunities for small businesses to work with nonprofit organizations.
To be eligible for the SBIR and STTR programs, you must operate a U.S.-based small business that is more than 50 percent U.S.-citizen owned and has fewer than 500 employees.
These programs have three phases:
Visit SBIR.gov to learn more about SBIR and STTR program requirements and applications.
Small businesses seeking grant funding at the state level should consider STEP funding, an SBA small business grant. STEP awards are given to state entities to increase exporters and sales in their state.
Small businesses can find STEP awardees in their state to access STEP resources and expand their global customer reach. STEP financial support helps small businesses learn how to export, participate in foreign trade missions and design and develop products to attract foreign buyers.
The EPA helps many businesses, from small nonprofits to large state governments, by offering billions of dollars in grants and other assistance agreements. It’s focused primarily on aiding the development of human health and the environment. The EPA home page features helpful guidance like available training and grant opportunities, application processes and rules and policies.
Visit the EPA grants website to see the EPA grant and training assistance available to you.
If you’re a small business (fewer than 50 workers and less than $1 million in gross revenue) operating in a rural area (population under 50,000), you may be a prime candidate for funding from a USDA Rural Business Development grant.
This grant is awarded to public entities, such as towns, communities, state agencies and nonprofits, to benefit small and emerging businesses in rural communities based in industries like land acquisition or development, pollution control and abatement, rural transportation improvement and economic development.
The USDA also offers other rural grants, loans and loan guarantees. You can narrow your search based on your specific state. Visit the Rural Business Development Grants website to learn more.
Small businesses operating in the education industry can access grants offered by the U.S. Department of Education. It has dozens of grants for specific uses like scientific research, state education and special education. Each grant lists program information like who is eligible to apply, total program funding, award ceilings and number of awards.
Visit the U.S. Department of Education website to view and apply for education grants.
The SBA offers federal grants to service-disabled veteran small business owners through the Service-Disabled Veteran-Owned Small Business Program.
To qualify for the program, you must meet certain ownership and operational requirements. For example, your small business must be at least 51 percent owned and controlled by service-disabled veterans, and you must have one or more service-disabled veterans who make day-to-day and long-term decisions. As a member of the SDVO SBC Program, you will be eligible to compete for set-aside contracts.
Visit the Veteran Contracting Assistance Programs website to learn about SDVO SBC Program benefits and requirements.
Applying for a business grant is a long and involved process, so it’s crucial to apply only for the ones you’re eligible for. To narrow your search to a select few grants, carefully check the details and deadlines of each grant you consider. If you meet the general business criteria, take it a step further and ensure your goals align with the government grantor’s goals.
“Businesses need to be aware of the problem they are going to solve using the grant,” advised Will Ward, CEO of Assistive Listening HQ. “It should be double-checked if solving this particular problem is part of the goals of the government entity giving the funds.”
Ward also recommended researching similar problems being solved by other companies and the amount invested, as this knowledge will help you prove eligibility in securing the grant. Once you find a grant that aligns with your company goals, the next eligibility step is to verify that you can meet the grantor’s required conditions.
Securing a government grant isn’t easy. Although grants are technically free money, you must put time and energy into ensuring your application is as good as possible. You want to give your business the best chance of securing a grant and receiving funding.
“A great chunk of time will have to be allowed to put together all of the paperwork and make the grant application,” noted Ryan Pitylak, chief marketing officer and founder of ZenBusiness. “You’re advised to perform a cost-benefit analysis to find out whether it’s worth your while.”
Securing a government grant is just like securing any other grant:
Applying for a government grant is one thing, but how do you get the grant? Here are five tips for securing a grant:
Ensure your business plan answers essential questions like what your organization’s competitive advantage is, if your business is in a growth market, if there’s customer demand for your offering and how you’ll staff the business.
Where small business loans typically come from privately owned companies, government grants are free money from federal, state and local agencies. This immediately puts a reputable name to your funding, though it does ― as is standard for government procedures ― introduce lots of paperwork. With the help of grant application experts on your side, this paperwork can feel more like a hill than a mountain. On the other side might lie exactly the funding your business needs.
Max Freedman contributed to this article. Source interviews were conducted for a previous version of this article.