Small businesses and startups can enjoy small business grant programs through the federal, state, and local governments. However, since small business grants are so competitive, you need to ensure you have a solid application to be successful.
Government Grants for Small Businesses
If you’re an entrepreneur looking to secure funding for your small business but don’t want the financial commitment of applying for a loan, a grant could be a great option. Government and state agencies, nonprofit organizations, and private businesses offer grants to entrepreneurs.
Business grants and business loans are beneficial for securing funding for your business. The main difference between the two is that business grants don’t need to be repaid, while business loans must be repaid within the timeframe and at the interest rate agreed upon in the loan terms and conditions.
Grants are essentially free money that’s given to your company to serve a specific purpose. With several grants available from several different sources, it takes a lot of time to research and apply, but it is ultimately beneficial. Let’s take a look at the different types of government grants available and the business grants eligibility.
Federal Government Grants
The government is one of the largest organizations offering small business grant programs to support various types of businesses. Small business owners may feel intimidated to apply for federal business grants, given the large number of entrepreneurs who apply for these grants. However, these are excellent opportunities for businesses to grow.
- Grants.gov is a massive database of small business grants being offered by federal government agencies. This centralized hub is an excellent resource for learning about the different federal grant sources, searching for grants you’re eligible for, and submitting applications.
- Small Business Innovation Research (SBIR) and Small Business Technology Transfer Programs (STTR) are programs that help connect entrepreneurs with business grants from twelve different government agencies. These grants focus mainly on technology, innovation, and scientific research. To qualify for these grants, you must operate a for-profit business with under 500 employees.
- The U.S. Department of Agriculture (USDA) Rural Business Development Grant is a program that provides financing to small businesses owned by farmers, ranchers, and other agricultural producers in rural communities. To qualify, these businesses should have under 50 employees and less than $1 million in gross revenue.
State and Local Grants
While federal grants are offered on a larger scale and are very competitive, entrepreneurs also have the option to apply for state and local government grants.
- The Economic Development Administration offers business grants, resources, and technical assistance to communities, supports economic growth, and encourages entrepreneurship and innovation.
- Small Business Development Center (SBDC) is usually connected to local universities and the state economic development agency. It supports small businesses and aspiring entrepreneurs by providing them access to small business grants, business financing options, training, and technical access.
- Minority Business Development Agency Centers (MBDA) is a national network of business centers that are dedicated to supporting minority-owned small businesses. The centers help business owners access capital through debt-based financing and federal business grants.
How to Get Approved for Small Business Grant Programs
Getting approved for a small business grant is similar to applying for a business loan. Like loans, every business grant has requirements, terms, and conditions you must adhere to to ensure business grants eligibility. The following is a simple seven-step guide to help you successfully apply for government funding for startups.
- Verify You Meet the Program Requirements. To be considered for a business grant, every applicant has to meet the specific criteria outlined by the organization. The requirements will indicate the business grants eligibility in terms of the location, business size, and industry. Some grants may also require you to register as a member of the organization before applying.
- Create a Solid Business Plan. Your business plan is arguably the most important part of your grant application. You need to spend a lot of time perfecting your business plan. You must ensure that it’s well-written, high quality, detailed, and presents an in-depth picture of the future projections for your business.
- Prepare Your Organization’s Documents. In addition to your business plan, there are several business documents that you would need when applying for a business grant. You must provide your revenue history, organizational chart, bank statements, tax returns, locations, and contact information.
- Review Any Funding Match Requirements. Some grants require you to match the grant amount with your own funding. If you’re applying for a grant with these stipulations, prior to applying, you need to determine if and how you could come up with this money.
- Review the Grant Objectives. When preparing your grant application, be sure to reference the objectives within the application. This is an important indicator to the organization that you clearly understand the grant’s objectives.
- Detail How the Grant Will Benefit Your Business. Most small business grants are awarded for a specific purpose. When preparing your application for a small business grant, be sure to indicate exactly how your business intends to use the grant and how being given this fund will benefit your business in as much detail as possible.
- Apply Early. Grants typically have a finite pool of awardees and will stop considering applications after they’ve received a certain number of applications. If you want to ensure your application is given the attention it deserves, keep an eye out for grant deadlines and apply as early as possible.
Common Mistakes When Applying for a Grant
Applying for small business grant programs involves a long and often complicated process. There are several mistakes that people often make when applying for these grants, and the following are the top four most common mistakes.
- Overstating Your Needs: You’ll be expected to clearly detail your specific business needs in your grant application. Be as transparent, honest, and realistic as possible about how much your business needs and the time you require to complete the project. The government doesn’t have the time to reach out to anyone to understand why they’ve quoted certain figures on their application. If your application doesn’t seem realistic, it won’t be successful.
- Not Asking for Help: If you’re confused or unsure about anything related to the grant application, don’t hesitate to contact a grant officer or a grant writer for advice. These individuals are skilled at grant writing and would be able to offer you invaluable advice on your application.
- Being Unprepared: Before submitting your application for government funding for startups, you should ensure you have everything you need. Being unprepared could lead you to make arbitrary mistakes like accidentally leaving out an important document or mixing up the due date for the application. Ensure you enter this process with a clear head and provide sufficient time to prepare the best possible application.
- Being Average: If you submit an application that doesn’t stand out among the rest, you increase the likelihood that your application won’t be successful. The government receives several applications for business grants on a daily basis. If you want to stand out from the others, you must present an application that’s stylistically different from the rest.
Why Would a Grand Be Denied?
It’s actually very common for a government grant application to be denied. One common reason why grants are unsuccessful is that the applicant did not clarify how the grant would support and develop their company. However, there are several different reasons why your application could be deemed unsuccessful, which may not have been an error on your end.
One possible reason could be that despite having a well-written application, you may not be eligible for the specific grant you applied for. Additionally, considering the volume of applications received, it’s possible that your project simply could not be funded at this time.
If your grant application is unsuccessful, it does not mean that you should give up. Find out from the organization the reason for your denial, and then, after you’ve revised and strengthened your proposal, reapply for another government business grant with confidence.
Why You Should Consider Applying for a Small Business Grant
If you’re a small business owner, you understand that having a business means constantly looking for ways to grow and finance it. While you may have considered applying for a loan, there are several benefits to applying for government funding for startups instead.
A successful grant application would provide your business with a financial boost to take your company to the next level. While loans need to be repaid, grants don’t, so the money that would go into the business would stay in the business.
Additionally, securing funding from a reputable agency is an excellent way to prove that your business is a smart investment opportunity. A grant would boost your company’s reputation among investors and attract additional funding from investors.
The downside to a business grant is that, in most cases, the money must be used in a specific way rather than you choosing how to spend the money. While this can be seen as a disadvantage, if you’re applying for a grant, you should know how the grant objectives align with your vision for your company.
So, if you’re searching for a way to finance a project or expand your company, a government business grant could be exactly what you need to achieve your business goals.
