The United States has more than 30 million Small and medium-sized enterprises (SMEs). They account for about two-thirds of jobs in the private sector. Being a critical component of the country’s economy, SMEs have gained a keen interest of the government.
Many startups and existing businesses face a challenge in growth due to inadequate business financing. Although many banks and financial institutions are willing to offer credit, no offer beats accessing free money.
Some say that nothing comes for free, but this is not the absolute truth when it comes with funding a business. There are many sources of business grants including government institutions and private companies. A grant is an excellent way of cutting the cost of doing business.
Would you like to know which business grants you qualify for and where to get them? This guide summarizes what you need to know.
What Is a Small Business Grant?
Small business grants are funds given by grantmakers to help businesses to get started or expand. They also help companies to continue running and stay profitable when facing dire financial challenges. Grantmakers include governments and private organizations and foundations.
Why Small Business Grants Are Important
With today’s state of economic hardships, some startups collapse due to their inability to raise capital. The result of failed businesses is the loss of jobs and reduced consumer spending.
The economy also suffers from a decrease in tax revenues, yet the country has to support even the unemployed citizens. Therefore, the government dreads the thought of a fallen private sector.
Grantmakers have objectives. You only qualify for funds if your intended use in line with their rules.
Business owners, on the other hand, reap numerous benefits from small business grants. First off, grants are free, unlike loans. If you access one, there are no interest rates, limitations, or terms to worry about.
Grants are free of risks, but you must be ready to face stiff competition from other interested parties.
Conditions for Getting a Business Grant
Business grants do not come in a platter. Many business owners are watching, and you have to meet the requirements of the grant you are pursuing. In most cases, you need to disclose a lot of personal details.
You may also have to prepare a proposal with a compelling business plan elaborating how you intend to spend the cash. Among other information, the grantmaker may also require proof of insurance that matches your business practice.
If you qualify and receive the funds, you will need to provide regular expenditure reports highlighting how you are using the money. You may have to pay some of the cash back if you can’t keep up with the specified benchmarks.
Grants for small businesses are specific. You cannot take the money and use it for purposes other than what the program stipulates.
Take an example of an entrepreneur who requests for a grant with a promise to hire extra workers. If he decides to purchase office equipment instead, he may have to refund the grantmaker.
In as far as this is free money, do not apply for it before reading and understanding the terms and conditions of the grant.
Sources of Small Business Grants
Entrepreneurs have several places where they can source grants to start new ventures or to support business operations. Some of them include nonprofits, various companies, and some banks. The government also offers grants to SMEs.
The process of identifying entities that offer grants can be strenuous. It takes in-depth research to find a potential grantmaker to pitch.
You can search the internet or visit the government website for grants for further information. A financial consultant can save you the trouble altogether.
Categories of Small Business Grants
Online resources that discuss grants for businesses are scarce. Most of the available ones are out of date, or the information is not straightforward. It takes determination and hours of exploration to get what you need.
If you would like to know the types of grants available for small businesses, you have come to the right place. We have compiled a list of the common types of grants and elaborated them in clear language. Here are the main groupings:
Federal Small Business Grants
A lot of departments of the Federal Government of the United States provide small business grants. Most of them fund research and development aimed to propel government initiatives and programs and the economy at large.
Some of the small businesses that qualify for such funds are those that explore farming, renewable energy, and childcare services.
The government usually funds these projects in phases. They come with specific topics depending on the industry, and applicants need to understand the underlying conditions. You have to act within the terms of the fine print and submit to deadlines.
State Small Business Grants
The other small business grants that entrepreneurs in the United States can access is at the state level. The funds available are not as vast as those offered by the federal government, but they provide significant financing to business owners.
Some of the grant programs offer monetary assistance to businesses that export local goods worldwide. Others are in the form of incentives to attract entrepreneurs to launch business ventures in the state. Most small business grants are similar in all American states.
Local and Regional Business Grants
The probability of landing a local small business grant is way higher than receiving funds from a federal or state program. The grants are precise with whom they target, often citing specific neighborhoods.
An example of a local small business grant is the Chicago Small Business Improvement Fund. It offers proprietors of industrial and commercial properties finances to remodel or repair their facilities. Funds offered can go up to $150,000.
The competition for this lucrative offer is usually stiff since anyone who owns property in the region can apply.
Apart from providing funds, they present other opportunities for business growth such as training and mentorship.
Corporate Small Business Grants
Some well-to-do corporates offer funding to entrepreneurs in the form of grants to help them develop their ideas into business. This is a significant boost to startups that face the looming danger of closure due to underfunding.
By so doing, the grants enable more businesses to bud, and this improves the local economy.
Most corporates emphasize innovation, and they don’t limit the grants to geographical location or industry.
Small Business Grants for Veterans
Almost all grants for veterans come from the government. In most cases, they are available for a specified period after which the funds can’t be accessed. This limitation notwithstanding, the grants remain a viable source of business financing.
Veterans interested in doing business are also eligible for grants through various corporations. They provide incentives like discounting off franchise rates and expenses.
One example is the 7-Eleven Veterans Franchise Program. Veterans who qualify get about 65 percent financing and up to 20 percent off the franchise fees. They may also receive other forms of special funding.
Small Business Grants for Women
Female entrepreneurs have the privilege of getting grants unique to women. Issues like wage versus gender gap and limited promotions for women have disadvantaged ladies for decades.
Women-only grant programs aim to support women in business to overcome this imbalance. They eliminate the bottlenecks that hinder ladies from exploring their entrepreneurial capacities and building business establishments.
Women-only incubators and accelerators are also great sources of funding for female business owners. Besides money, they offer a combination of goodies like workspace and mentorship.
Most of them reside in big metropolitans. Although this sector has not seen much development in recent years, you could locate incubators and accelerators near you through research.
Business Grants for Minorities
Victims of social and economic inequality often have difficulty in advancing their business ideas. That’s where small business grants for minorities comes to save the day. The grants are quite broad in range.
For instance, the Department of Transport (DOT) provides funding and resources to aid the socially and economically deprived. Three conditions apply for eligibility. You must be a lady or ethnic minority who controls of at least 51 percent of the business.
Grants for College Students
The grants discussed here are not for tuition fees. They are awards for young entrepreneurs who win in business proposal and pitching competitions.
The organizers of these competitions are parties like universities, companies in the locality, as well as students.
Winners benefit from monetary support, mentorship, and training to help them kick start and accelerate their business ventures.
Entrepreneurs are keen to diversify their sources of funds to keep their businesses going. Diversification is crucial, and cheaper or free options like small business grants are attractive financing options.
Grants can be hard to get due to the number of interested parties at any given time. If you are to benefit from a business grant, you must be vigilant not to miss any opportunity that presents itself.
However, grants have stringent conditions for qualifying applicants, and you shouldn’t apply if you can’t fulfill them. If you are eligible and you are okay with the fine print, go for it.
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