Small Business Grants
For entrepreneurs and small business owners, securing funding is often one of the biggest hurdles to overcome. While loans and investors are options, grants provide access to non-dilutive capital that does not need to be repaid. Government agencies, nonprofits, and other organizations offer millions in business grants yearly to drive economic growth.
If you’re looking to start, expand or recover your business, grants can be a crucial source of financing. This comprehensive guide will explain what business grants are available, how to qualify, and tips to write a winning grant application. With diligent effort, securing grants to support your venture is possible.
What Are Small Business Grants?
Small business grants provide funding that recipients are not required to repay, in contrast to loans. Government agencies and nonprofit organizations offer grants to support the growth and viability of small businesses in various industries and communities.
Recipients can use grant funds for a wide range of business-related purposes such as:
- Starting capital and early operations costs
- Purchasing inventory, supplies, equipment
- Expansion projects like new locations
- Research and development
- Worker training and hiring
- Marketing, advertising and branding
- Software, technology and tools
- Specialized facilities, equipment or inventory
- Building renovations and tenant improvements
Grants are highly desirable financing because they do not take equity in your company or accumulate interest. Once awarded, you can put the capital to work growing your business.
Types of Small Business Grants
Many different organizations provide small business grants. Major categories of grants include:
Various federal agencies and state/local governments offer grants especially targeted to certain business types, communities, and policy goals. Examples include:
- Small Business Innovation Research (SBIR/STTR)
- State trade and export grants
- SBA 7(a) Community Advantage loans
- USDA Rural Business Development Grants
- EPA Environmental grants
- HUD Community Development Block Grants
- County and city small business support
Government grants usually have extensive eligibility requirements given their public funding source but can be very substantial amounts. Competition is high so applications require effort.
Nonprofit and Foundation Grants
Private philanthropic foundations, nonprofits, and impact investors also offer small business grants, focused on mission-driven categories like:
- Women entrepreneurs
- Minority/immigrant business owners
- Low-income and underserved communities
- Veteran-owned businesses
- Startups and technology entrepreneurs
- Businesses preserving arts, culture, or history
Examples of philanthropy granting institutions include Hello Alice, The Rockefeller Foundation, McKnight Foundation, The Skoll Foundation, and the Tory Burch Foundation.
Bank and Corporate Grants
Banks and corporations also issue grants as part of their community investment initiatives. These vary year to year based on priorities. Examples include:
- Wells Fargo Works grants for small businesses
- Visa Back to Business grants
- FedEx Small Business Grant contest
- Chase Mission Main Street Grants
- Verizon Small Business Recovery Fund
- Intuit Quickbooks grants
Industry associations and small business partners like lending companies or SaaS tools also offer grants to shared clients, often through contests and promotions.
Educational Institution Grants
Many colleges and universities provide grants to support startups licensing technologies or intellectual property developed on campus. Accelerators and incubators affiliated with schools also invest grant capital in their member startups.
- MIT Deshpande Seed Grants
- Stanford StartX Fund
- University of Michigan Zell Lurie Grants
- UC Berkeley Bakar Fellows Program
- Techstars University Innovation Fellows
Student entrepreneurs and recent alumni launching or growing a business can access campus grant programs.
Crowdfunding Grants and Contests
Numerous organizations provide grants through business plan competitions, pitch contests, and crowdfunding campaigns. Winning these startup events provides grant funding, exposure, and validation. Examples include:
- FedEx Small Business Grant Contest
- UPS Business Plan Contest
- Chase Mission Main Street Grants
- Idea Cafe Business Idea Contest
- Get Seeded Business Plan Competition
- Forbes Under 30 Grants
- National Black Chamber of Commerce VC Pitch Contest
Many federal agencies like the SBA and USDA also host annual business competitions awarding grant prizes to winners.
Competitive business plan contests are a bootstrap method to access early startup funding without equity dilution.
Qualifying for Business Grants
To qualify for government and nonprofit grants, businesses must meet various eligibility criteria. While specific requirements vary by grantor, common considerations include:
Type of Business
Some grants target specific industries and sectors based on sponsor priorities. For example, technology startups receive many specialized grants. Others focus on retail, manufacturing, arts, rural businesses, exporters, etc. Review whether your primary business activities align with grantor preferences.
Grants that support early-stage businesses have different requirements than those helping existing companies expand. For example, startup business plan contests want newer ideas while growth grants require an operating history. Many specify business stages from pre-revenue to 3+ years in business.
The size standards to qualify as a small business for grants depend on your industry and metrics like annual revenues or number of employees. For federal grants, your business must fall under relevant SBA small business category thresholds. Other grants are limited to very early stage or “micro” businesses.
Some grant programs like state economic development grants require locating your business in certain regions or cities. Rural area grants have geographic requirements too. Federal grants are nationwide although some weight areas with higher economic need.
Government wants to support disadvantaged business owners through grants. Minority, women, veteran, disabled and LGBTQ owned businesses may qualify for set-aside grants. Some focus on low-income entrepreneurs in underserved communities.
Use of Funds
Grant applications will request a detailed budget narrative on how you will use the award. Your planned use of proceeds must adhere to grantor guidelines and show potential for impact. Some do not fund certain expenses like owner compensation.
Matching broader business needs like equipment purchases, training, marketing, or growth initiatives to grantor funding priorities and guidelines is key to qualifying.
How to Find Business Grants
Finding relevant grants that align with your startup takes research across the sources discussed. With hundreds of grants available yearly, how can you identify ones to pursue?
Check Federal Grant Databases
Grants.gov and SAM.gov list all open federal grant opportunities with applications. Search by agency, category, deadlines etc. Sign up for email notifications of new grant postings.
Leverage State/Local Resources
State economic development agencies and SBA District offices provide listings of local grant programs, events, and assistance. City governments also promote grants especially for downtown districts and opportunity zones.
Search Grantor Websites
Foundations and nonprofits detail small business grants on their websites and annual reports. Banks also list community reinvestment grants online. Monitor regularly for when applications open which is usually once a year.
Use Grant Search Tools
Search online for tools like GrantWatch that compile grants from multiple sources into comprehensive directories covering government, nonprofit, corporate and other grants. Grantee associations also list member opportunities.
Attend Small Business Events
Look for local small business conferences, seminars, meetups, and pitch events. These often highlight available grants and forthcoming application deadlines. Many feature guest speakers from economic development agencies. Exhibitors also promote grant contests.
Get Support From Partners
Your local Small Business Development Center, SCORE chapter, Women’s Business Center, SBA Resource Partner, and even your bank can educate you on possible grants. These support organizations want to inform businesses on available funding opportunities.
Sign Up for Newsletters
Subscribe to email newsletters from grantors, government agencies, small business service providers, crowdfunding platforms, and related associations to stay on top of the latest announcements and deadlines.
Follow Social Media
Grant providers promote opportunities on Twitter, Facebook, LinkedIn and other platforms. Follow them and relevant hashtags like #smallbiz, #startups and #smallbusiness
Continual due diligence across these channels will uncover the grants best matching your business goals. Monitor closely and keep organized track of deadlines.
How to Write a Winning Grant Application
Once you find a promising grant opportunity, successfully applying requires meticulous preparation. Competition is stiff with rejection rates of 90% or higher. Crafting an engaging yet substantive application is key.
Read Guidelines Thoroughly
Before applying, carefully review all grant guidelines, eligibility rules, FAQs, budget requirements, and judging criteria. Follow directions precisely. Confirm you qualify on all parameters.
Make a Compelling Case
Shape an executive summary that grabs attention and clearly states why you deserve funding. Summarize how awarding a grant will further the sponsor’s mission. Tell your story.
Profile your business history, current stage of operations, legal structure, team, and growth to date. For startups applying for business plan contests, include your credentials and relevant experience.
Explain Your Funding Needs
Detail exactly how much funding you seek, how you will use it, and the timeline. Outline specific goals/milestones to achieve with the grant like hiring, expansion, R&D, etc.
Describe Your Market Opportunity
Analyze the landscape, target customers, their pain points, market size, and how you will capture share from competitors. Substantiate demand for your offering. Provide research data.
Develop Your Business Model
Lay out your products/services, operations, marketing, distribution, and revenue generation strategy. Explain how you will leverage the grant funds to de-risk your model through validation.
Project Realistic Financials
Create projections for income statement, balance sheet, and cash flows. Estimate revenues conservatively and costs accurately. Outline assumptions and tie to funding needs.
Demonstrate Community Impact
For government and nonprofit grants, quantify the economic and societal benefits of supporting your venture like job creation, enabling underserved groups, environmental gains, etc. These mission impacts matter.
Include Supporting Documents
Provide supporting elements like owner resumes, customer evidence, financial history, official registrations, photos, testimonials, AND awards. Follow all document guidelines specified.
Refine and Practice Your Pitch
For contests and live presentations, craft a clear, succinct slide deck. Refine through practice sessions. Convey passion, expertise, and likeability for extra persuasiveness during in-person pitches.
Polishing all components of your application and aligning them to grantor scoring rubrics and preferences is essential to edge out the competition.
Tips to Improve Your Odds
Follow these tips when applying to boost your odds of winning:
- Start early – Give yourself ample time to put together quality materials.
- Follow up diligently if you don’t hear back to check status.
- Meet deadlines – Submit required documents on time.
- Call program managers to advocate for your application.
- Apply every year – Learn and improve each round.
- Partner with grant writing consultants or an SBDC advisor.
- Highlight sustainability, diversity and community impact.
- Get references and endorsements from local leaders.
- Proofread meticulously and have others review.
- Be concise – Avoid repetition and stick to space limits.
- Use visuals like charts judiciously to illustrate key points.
- Customize applications for each grant – No form submissions.
- Explain past challenges and how you overcame them
- Emphasize how grant funds will be reinvested in local economy.
With careful preparation and persistence, your business can beat the odds to win coveted grant funding. Don’t get discouraged; apply regularly until you secure grants to take your venture to the next level.
Managing and Optimizing Grant Awards
Winning a grant is a major milestone but careful management of the award is now required. Don’t lose funding by neglecting compliance and follow-up.
Understand Grant Agreements
Review grant paperwork in detail. Ensure you comply with how funds must be used, reporting deadlines, attribution requirements, reimbursement terms, and other stipulations.
Follow a Budget
Track grant money separately from general business finances. Allocate towards uses outlined in your approved application like marketing, payroll, R&D. Get receipts and documentation.
Meet Reporting Requirements
Provide ongoing status reports to grantors on budget spending, milestones, and goal progress. This demonstrates responsible stewardship of awarded funds.
Beyond required reports, inform sponsors regularly of how the grant enabled growth, community benefits, new partnerships, and other positive outcomes. This builds ongoing relationships for future funding.
Fulfill all expected recognition of the grantor through your website, signage, press releases, social media, and event mentions. This shows appreciation.
Leverage the Award
Promote the grant win through press announcements and as a credibility marker when interfacing with potential partners, investors and customers. Being a grantee brings prestige.
Thoughtful grant management strengthens your reputation with sponsors and the broader ecosystem. This smooths the path for supplemental and renewal grants to support your next growth phases.
Small business grants provide invaluable non-dilutive financing that can empower entrepreneurs to start, grow, and innovate. While highly competitive, securing grants is possible with meticulous preparation, persistence through successive application rounds, and relationships with granting organizations.
Complement grant funding with other sources like loans and equity investment. Through robust funding and smart deployment of capital, previously out-of-reach business goals become achievable. Consider grants an underutilized tool in your business finance toolbox. Wielded strategically, they can accelerate your path to success.