The idea of starting your own business, keeping your own hours, and being your own boss can be exhilarating — if not for the uncertainty and expenses associated with the process. The startup cost of opening a barbershop and becoming a freelance website designer may vary considerably.
Regardless of how small your operations are (microbusinesses, for instance, typically require at least $3,000 to start), you know you’ll need to cover the cost of permits and licenses, a website and other marketing materials, and any equipment you may need for your initial launch. You also need to make sure that your living expenses will be covered until your business is generating steady profits.
If you’re thinking about starting a new business, there are several financing options to acquire capital. You may apply for a loan, dip into your savings, or borrow from friends and family. You may also apply for small business grants to get some necessary capital and cash flow.
In this guide, we will discuss the different small business grants you may qualify for and how to apply for them. With the coronavirus pandemic wreaking havoc in the economy as of this writing, these grants have come in handy in saving small business operations.
A small business grant is free money given to a business for a specific purpose. There are grants available to small businesses for startup costs, expansion, and research and development. Some grants are awarded based on factors like whether the business is minority-owned, women-owned, veteran-owned, or a nonprofit association.
There are nonprofit organizations, federal, state, and local government agencies, and even private companies that provide grant money to small business owners. The Small Business Administration is a great resource to learn more about grants.
Below are several grant programs available to small businesses for which you may qualify. You can apply for as many as you want, especially when the qualifications are broad and the requirements are not specific. However, it also means there is more competition because more businesses can apply. We recommend narrowing your applications to grants based on your business structure and industry.
The U.S. Small Business Administration was created in 1953 as an independent agency of the federal government to help Americans start, build, and grow businesses. Its mandate is to strengthen the economy by providing tools to help start and grow small businesses, which can then create jobs. The agency helps businesses find funding by providing grants, small business loans, and community resources.
The SBA is the only cabinet-level federal agency dedicated to small businesses. Aside from providing counseling and funding options through SBA loans, it also serves as the voice for small businesses. To that end, it currently has a task force working to evaluate small business regulations. The purpose of the initiative is to reduce unnecessary regulatory burdens to small businesses.
The SBIR is a competitive grant program designed for small businesses engaged in the research and development of scientific and high-tech innovation. The program has 11 government agencies with varying eligibility guidelines, research and development topics, and application review procedures.
Businesses must be for-profit with less than 500 employees and meet all of the eligibility requirements to qualify for the SBIR program. To check for available grants, browse “solicitations” posted by federal agencies and filter by program, agency, or phase. Click on the headline for further details on how to apply.
A qualifying business for an SBIR grant includes one working on an engine prototype that is more eco-friendly, for instance.
The STTR is a grant program that shares similar innovative goals with the SBIR program with one further requirement: The program encourages small business applicants to partner with a non-profit research institution during the first two phases of the development. The SBIR and the STTR programs help connect small businesses with federal grants that start at $150,000 and can go up to $1 million.
Someone who might qualify for this grant includes a self-employed individual who developed a new technology to help facilitate medical record consolidation.
Outside of the SBA, you will also find government agencies distributing grants for enterprises from environmental conservation to child care services. The application process can be complex, but federal grants are great opportunities for small-business owners looking to expand. Below are a few examples of such grants:
The National Institutes of Health, under the Department of Health and Human Services, provides grants, cooperative agreements, and contracts to scientists and small businesses working on the scientific research and development of biomedical innovation. The agency has different types of grants available for a wide variety of federal research viable for commercialization.
The Department of Interior through the Fish and Wildlife Service, Indian Affairs, and National Park Service offers various financial assistance programs and awards grants to businesses, individuals, nonprofit organizations, and other institutions. To qualify, your work must be in preservation planning, policy guidance, and technical assistance of preserving America’s historic places and diverse history.
This program acts as a grant distributor and lender by providing grants and guaranteed loans (or a combination of both) to farmers and small businesses in rural areas. The grants are available to support improvements such as the construction of renewable energy systems or the purchase of energy-efficient equipment for agricultural production and processing.
This branch of the Department of Agriculture offers competitive grants to small businesses that are working on any advancement in the agricultural field. Funding programs are available for high-quality research centered on forestry, food science and nutrition, aquaculture, biofuel products, animal protection, and more.
If your business is focused on research and development, environmental and climate initiatives, or high-tech innovation, there are numerous federal grants you can apply for as a small business. Here are three organizations you might want to start your search with:
Grants.gov is a comprehensive database of grants for small businesses administered by various government agencies, such as the U.S. Department of Education and the Department of Energy.
To check for grant opportunities for your business, you are first encouraged to register an account and then search for grant opportunities. Tick “small businesses” under “Eligibility.”
The Score is a nonprofit organization dedicated to helping small businesses get off the ground, grow, and achieve their goals through education and mentorship. In collaboration with SBA, Score.org aims to foster entrepreneurship as America’s premier source of free and confidential small business advice. Aside from one-on-one mentoring, the organization also offers live webinars, interactive courses on demand, and local workshops that business owners can join and attend.
Small Business Development Centers (SBDCs) offer free marketing, financing, and business-related assistance to local business owners. You can find them in all states, Puerto Rico, and the U.S territories. In partnership with the SBA and, usually, a local college or university, SBDCs aim to launch and assist small businesses and create jobs by providing educational resources to business owners.
The process of searching for grant opportunities for your small business, writing a proposal, and waiting to hear if you got the funding can be complicated and time-consuming. Before you start, be sure to read the eligibility requirements, be as truthful as possible in your proposal, and submit your applications on time. It’s also important to remember these general guidelines:
As you can see, there is an exhaustive list of grants, contracts, and microloans available to small businesses, especially for specific industries such as health care, energy, and agriculture. For your grant application, ensure your business stands up to the requirements and you can show how the funding opportunity can strengthen and expand your business idea.
Ready to Start Your LLC?