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Business grants can be a great way for your business to get funding for your business. A business grant can be an attractive option to traditional funding options as they are essentially free money they don’t need to be repaid.
Some grants offer financial assistance, while others help fund research and development. Grants are therefore a great way to help establish and grow your business. Subsidies and grants are considered as one the best ways of funding.
What is a Grant and How Does it Work?
Simply put a grant is money that is given to a person, business, or corporation from federal, state, local governments, nonprofits, or corporations. Because they do not require repayment of any kind making them an attractive financial consideration for entrepreneurs and small businesses for start-up, growth, or expansion.
Usually, a grant becomes available when a government agency, nonprofit or private business chooses to set aside grant money for an area of concern of their choice. This could be to encourage minority entrepreneurship in a community, stimulate small businesses in communities, or reward innovation. Once the opportunity is created, applications are made, award decisions are made, and the money is allocated.
Reasons to Get a Small Business Grant
Business grants offer opportunities to raise your capital, buy machinery, hire more staff, refinance existing loans and increase your operational capabilities without the financial pressure of repaying loans. There are common reasons why small business grants are popular. Here are five great reasons to get small business grants:
It’s Free Money (Sort Of)
There’s one big difference separating a grant from other types of money. Grants don’t need to be paid back as small business loans do. And there’s no interest levied on the business grants. However, you can’t use the cash for anything outside the designated purpose of the grant.
You Need Working Capital
Grant money can help to shore up working capital. A small business can use a business grant to beef up its technology or franchise. Businesses choose to apply for grant funding to create enough working capital to enable them to fulfill their growth ambitions. Grants can help cover their short-term funding needs while giving the business the extra ash that they need to grow, or even boost their inventory to take on more orders.
Buying more assets
For your business to grow and increase sales you will need to buy more machinery and even vehicles. Sometimes money for these additional expenses might not be available from the money you make from your business a grant however can help fill this void. A grant can help you acquire to get these new assets.
Starting a business
If you happen to be in the startup stage of your business then a grant can give you the extra resources to get your business off the ground. This is especially handy if you cannot self-fund your company or take a loan from a bank.
To expand your market
Some business grants will let you expand into new markets. For example, the Small Business Administration’s (SBA) State Trade Expansion Program (STEP) provides financial awards to assist small businesses with export development. Besides helping you enter international markets; through the grant program you get to participate in foreign trade missions; help you in marketing your products internationally; gain support with e-commerce capabilities and more.
Different Grants for Businesses
As a small business owner, you have different grants available to you to fund your business projects as incubators, accelerators, or loan programs. Below are some grants available for small businesses and startups:
Federal government grants for small businesses offer funding to help launch or grow small businesses. Usually, Federal domestic assistance grants offer the most money and come with a lot of competition this is because there is no need for eligible grantees to pay the funds back so long as the grant is spent following the funding requirements. Make sure that your application for a government grant is well researched and clearly articulated. You can access a database for federal grants at Grants.gov.
Many states offer grants to small businesses to help contribute to job creation and stimulate the local economy. Usually, state grants are awarded to finance or reimburse activities that meet the State’s priorities and objectives at that time and are meant to support small businesses located within their territories. To access available grants in your state you can check your state’s official web page and search for a grant program that is suitable for you.
Local Government Grants
Local government grants are generally less competitive and more intentional about supporting small businesses. Small business support grants at the local level, tend to be even smaller and are often designed toward improving the local community, so if your startup or small business is focused on bettering your town or county, you might want to consider looking at local grants.
The Small Business Administration (SBA) is an independent federal agency set up to promote entrepreneurship and protect the interests of small businesses. It offers a range of grants for small businesses, minority-owned businesses, veteran-owned businesses, eligible community organizations, and others.
Some of its grants are for research and development while others are designed to help small businesses become resilient. The SBA has even provided pandemic relief to small businesses that were impacted by the pandemic through programs that include the Paycheck Protection Program (PPP), COVID Economic Injury Disaster Loan (EIDL), SBA Express Bridge Loans, and others. To access available grants go to the SBA’s grants page.
Government agencies aren’t the only source of small business grants corporations and large companies too through their philanthropic schemes offer small-business grants. Many private corporations and non-profit organizations also offer private grant programs designed to help small business owners start and expand their businesses.
While some of them provide grants to nonprofits servicing specific industries only while others give to for-profit companies. These grants are given based on merit and application materials, like essays, testimonials, or proposals. Some corporate grants to look into include FedEx Small Business Grant Contest, Visa Everywhere Initiative, and Amazon’s Black Business Accelerator Program.
Diversity grant programs are designed for the elimination of bias or the promotion of diversity by offering financial assistance. These grants provide funding to assist small businesses owned by women, minorities, those with disabilities, and age in a bid.
They often come with an application process that is easier to navigate and also offer some kind of technical assistance as well. If you are a minority-owned small business you can access some grant opportunities at National Association for the Self-Employed (NASE), WomensNet Amber Grant, and The Coalition to Back Black Businesses.
These are grants given by nonprofit organizations in a bid to forward a given cause. These grants come with a particular set of requirements on how the funding will be used. For example, they may be designed to promote local job creation, encourage research and development, support minorities, be eco-friendly and other goals.
Is a Business Grant Worth It for Small Businesses?
Yes, a business grant can help offer that extra financial assistance to get your business up or running or humming. What’s great about a business grant is that they do not need to be repaid. This comes in handy for businesses that may have financing difficulties and face challenges in repaying traditional business loans.
In addition, business grants are relatively easy to find online and can sometimes come with additional resources such as training and technical support that can improve your business’ effectiveness.
Where to Find Small Business Grant Programs
There are various tiers of business grants available from the federal level to the local or county government level. Most of them are available online such as through Grants.gov, SBA’s grants page, or your local chamber of commerce’s website.