While it might seem like nothing in this world is free, that isn’t necessarily the case when it comes to business grants. This funding source is essentially free money — you don’t have to repay it. But there’s a catch: The process of applying for and acquiring a grant is often lengthy and challenging.
Still, obtaining a grant could help you launch a new business during tough economic times or take on a specific project. If you think a grant may benefit your company, it’s crucial to fully understand which entities offer them and how to apply for one. Below is a guide to maximizing the chances of your grant application getting approved.
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Business grants are sums of money given by a foundation, government body or other entity to help businesses get started or grow their operations. Grants typically are desirable because they don’t have the same conditions as other financing options. Specifically, grants don’t need to be paid back like loans do, and business owners don’t need to give up equity in exchange for the grant.
While there are numerous options for business grants, they all come from one of three sources.
Grants can come from agencies on the federal or state level or a local government. These grants have the narrowest eligibility rules and are usually only provided to businesses rooted in science, technology, agriculture, energy or other industries that will bring direct growth to the community. [Learn how to get a government grant for your business.]
These grants primarily focus on specific underrepresented demographics, such as women entrepreneurs, veteran proprietors and business owners of various racial and ethnic backgrounds.
These come from institutions like banks and have the broadest eligibility criteria. These grants are given based on merit and application materials, such as essays.
Grants typically are awarded by federal and state government agencies, not-for-profit organizations and for-profit enterprises.
Preparation is key when it comes to grant applications. Since applying for a grant is time-consuming, there are several steps you should take to prepare properly for your application and simplify the process:
There are several additional steps businesses should take to ensure they are properly prepared for the application progress.
The first step in applying for a grant is to identify what type of grant your specific business is likely to receive. Companies in certain industries like eco-friendly sectors or owned by underserved demographics, such as veteran-owned businesses, may have better luck qualifying for particular grants. Start your search by looking for local grant providers and then expand nationally to see what’s available.
After you’ve determined what type of grants are achievable for your business, carefully read through the grant requirements and narrow it down to a few select grants. Before writing your proposal, consider meeting with the funding source, if possible. This is an opportunity to discuss your idea and get feedback before formally applying.
After conducting research and contacting the funder, the next step is to write the grant proposal. This part is critical and deserves a lot of attention as the purpose of your proposal is to demonstrate your worth.
You want to convey to the grant provider how the service you’re seeking funding for will help solve an existing problem in society. Establish credibility by detailing your organization’s history and crafting a narrative that reflects how receiving the grant will make a difference. It’s crucial to make a compelling case as to why you should receive the grant and what it will be used for.
Business grant proposals typically include the following sections:
Once you’ve written and submitted your grant, the last thing to do is wait. Check the grant submission guidelines to see the funder’s approval/rejection process as sometimes this will provide a time frame or a series of next steps for you to take. Some funders even provide a tracking number, so you can see the status of your grant proposal.
You typically will be notified when your proposal is pending and when your proposal is approved or rejected. If you aren’t able to find submission guidelines or tracking information, wait at least three to six months before following up.
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While knowing what to do when applying for a grant is critical, knowing what not to do is equally important. You must avoid falling prey to common application mistakes.
For example, a seemingly innocent but very common mistake is overapplying. When business owners apply for too many grants at one time, they decrease their chances of getting one due to reduced time and quality spent on each application. Instead, focus on applying for one or two grants that you’re likely to win.
Many business owners also make the mistake of being too general or unoriginal in their proposals. They describe their mission statement in vague terms instead of listing specific solutions for how they can satisfy the funder’s interests. Your proposal should explain the unique way in which this particular grant will help achieve your shared objectives.
Another frequent mistake business owners make during this process is not following directions. Grant suppliers are looking to see if you meet a very specific set of criteria, so following directions is an absolute must. Do not provide more information than requested and ensure you’ve followed every instruction to the letter, including the submission deadline.
Occasionally you may find a grant that comes with no strings attached, but this is uncommon. Once you receive a grant, you are accountable for following the guidelines set forth by the grant provider. For instance, most funders require you to provide progress reports so they can track the impacts of their funding over time.
The requirements for maintaining a grant are something you should be aware of ahead of time, although they are usually not too difficult to manage. Once you establish an agreement between the grant funder and yourself, you’ll be set to move forward with your business or project.
Although grant applications are known to be time-consuming and tedious, the result if you’re approved is free money. That prospect alone can make it well worth your while to hire a grant writer whose expertise can maximize your chances of approval. You should task this grant writer with one grant application at a time; applying to too many grants is a known cause of declined applications. Patience and expertise may well be your best bet for grant approval ― the least financially stressful funding you can obtain.
Max Freedman and Stella Morrison contributed to this article.