There are many sources of financial grants available to help your small business grow and succeed, including federal, state and city governments, as well as various charitable organizations and corporations. Applying for these grants can be time-consuming, but once you've obtained them, they offer several significant advantages over small business loans. Most importantly, grants don't have to be paid back.
Key Takeaways
- Many financial grants for small businesses are available from federal, state, local, and other agencies.
- Most grant programs accept applications online.
- Before you apply, make sure your business meets the eligibility requirements, some of which are very specific.
- Keep in mind that small business grants, especially those funded by the federal government, are highly competitive, so you may not be successful on your first try.
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How to find grants for small businesses
The first step in applying for a government grant or other small business funding is to find one or more grants that your company may be eligible for. In fact, this is the most time-consuming part of the entire application process. Here are some resources to help you:
Federal Government Grants
A good place to start is Grants.gov, which offers a guide to federal grants and a search tool to help you find the right grant.
One of the most common places to get business grants is the U.S. Small Business Administration (SBA), which offers grants to small businesses based on a variety of qualifications, including the business's industry and the owner's background, such as gender or minority status.
Other federal agencies that business owners may consider applying for grant funding from include the Department of Agriculture (USDA), Department of Energy (DOE), Environmental Protection Agency (EPA), U.S. Economic Development Administration (EDA), and the National Institutes of Health (NIH).
State, local and other grants
State or local governments may also offer grants or loans for small businesses, which you can search in the Community Economic Research Council’s State Business Incentives Database.
Finally, Small Business Development Centers (SBDCs) may also be able to help you find grant funding. There are about 1,000 centers across the country, so you can find one near you.
Application procedure for small and medium-sized business subsidies
Due to the wide range of sponsors and grant funding available, it is difficult to describe a “typical” application process, but it can generally be broken down into three main steps.
1. Check your eligibility
Before you spend time applying, make sure you know if you qualify for a business grant. This will save you and the reviewer a lot of time. Every grant has a goal, and to achieve that goal, you must meet a set of requirements laid out by the organization for you to be eligible for the grant.
Eligibility requirements may include the size of the business, the minimum amount of revenue the business must generate, the gender of the business owner, and the type of activity the business is involved in.
2. Gather the necessary backups
Every grant application requires specific documentation, so make sure you have all the relevant information organized before submitting your application to streamline the application process.
Information that may be required as part of your grant application includes:
3. Invest time in your application
The complexity of a grant application, and the amount of time you need to spend on it, will vary depending on the sponsoring organization and the type and size of the grant. For example, a grant from the federal government may involve many steps.
33.2 million
Number of small businesses in the U.S. as of 2019, based on the latest SBA data provided in March 2023.
Tips for qualifying for small business grants
Because business grants are such an attractive source of funding for small businesses, they tend to be highly competitive. This is especially true for federal grants. State and local grants may be less competitive, but you should still give serious thought to your application to maximize your chances of success.
Here are some tips to help make your application as competitive as possible.
- Read the grant objectives. Be sure to include the grant objectives in your application. From a sponsor's perspective, the best applications are those that clearly understand their objectives.
- Spend time on your business plan. A well-developed and well-written business plan is probably the most important part of your application. Take the time to ensure that it is of the highest quality, detailed, sophisticated, and answers every question you foresee.
- Please explain how you will use the grant funds. Most small business grants are supposed to be used for a specific purpose, so make sure your business plan explains how you plan to achieve that purpose. The more detail you can provide here, the better.
- Review fund matching requirements. Some grants require you to match your sponsor's funds with your own, so make sure you can actually afford it before you apply.
- Please apply early. largely Grant programs have limited funding and applications will no longer be considered once funding for the year has run out, so please be aware of deadlines and apply as early as possible.
All of this may seem like a lot to consider when you're first starting out with grant applications, but for most companies, it gets easier over time. Once you have all the paperwork in place and are familiar with a writing style that grant writers understand and prefer, applying for a grant becomes much easier and, ultimately, more successful.
What is a small business?
Definitions vary, but according to SBA regulations, the majority of manufacturing businesses with 500 or fewer employees and non-manufacturing businesses with average annual revenues of less than $7.5 million meet the criteria to be classified as a small business.
Why are grants being rejected?
There are many reasons why a grant application may be unsuccessful. You may not be eligible for the grant, or you may not have adequately explained how the grant would support and grow your business. Or maybe your application was great, but donors received too many applications and were unable to fund it this time.
Are small business grants taxable?
Yes, with very few exceptions, grants to businesses are taxable. On the other hand, the proceeds of business loans are not considered income and are not taxable.
Conclusion
Grants can be a better option than loans because they are like free money that doesn't have to be paid back and doesn't charge interest like loans. Applying for grants is competitive and difficult, but it could be worth it for your business.
You can maximize your chances of success by investing serious time in researching the right grant opportunity, making sure your application addresses the grant sponsor's objectives, and applying early before funds run out.
