Whether it's keeping up with regular monthly expenses or preparing for improvements or expansions, most small businesses can always use extra funding. And for business owners seeking capital, small business grants are essentially free money. When you take out a business loan or take on investors, those funds must always be repaid, but grants offer a type of business funding that never requires repayment.
Granting organizations have different reasons for offering free money to small businesses. Usually, they create grant programs because they are committed to the success of small businesses, a particular local community, or the growth of businesses in a particular industry. To benefit from the generosity of these organizations, there are a number of resources for small businesses to learn about federal, state, and private business grants and to apply for those grants.
Step One: Start with Research
To begin the search for grant funding, a business owner must conduct (sometimes exhaustive) research. Before you can apply for a grant, you have to find one or more grants for which you qualify—and most have fairly stringent guidelines.
The federal government is usually a good place to start your research. The Small Business Administration offers some small business grants, as well as helps businesses find other grants that may be a good fit. Information about U.S. government-sponsored business grants is available at Grants.gov.
Many cities and states also offer business grant programs. Local Small Business Development Centers are often associated with universities or state government agencies and may be able to connect you with financing opportunities. The U.S. Economic Development Administration provides grants and resources to communities to support economic growth and encourage entrepreneurship. Each state has an economic development agency that can help businesses find financing, including state or regional grants. Search the economic development directory for your local office.
Some private organizations also offer small business grants. For instance, during the coronavirus pandemic, Facebook has committed to offering up to $40 million in cash grants and advertising credits to 10,000 small businesses in the United States. Digital fundraising platform Hello Alice, in partnership with Verizon, is offering emergency grants of up to $10,000 to small businesses affected by the pandemic. Google and Yelp are offering grants in the form of advertising credits for qualifying small and medium businesses.
There are a number of business grants available for specific types of businesses, such as women-owned, veteran-owned, or minority-owned businesses. By conducting online research or checking in with your local small business resource center or Chamber of Commerce, or your industry organizations, you may be able to find one or more grants that could be a fit for you.
When you find grants that look like a good fit for your business, take time to read through the guidelines, and make sure you qualify. For instance, if the grant is for companies that have been in business for fewer than five years and you’ve been in business for six years, there’s no need to apply. Or if the grant is for businesses in a particular industry or community, make sure yours is a fit. If your business doesn’t fit the specifications of the grant, you would be wasting your time to apply because grant-making organizations usually adhere strictly to their qualifications.
Step Two: Apply for Grants
Usually, writing a grant proposal requires including detailed financial information, a description of a specific problem or need, and how your business will use the grant money to solve that problem or need. Rarely are grants provided for open-ended uses; instead, you’ll need to take time to determine the best way to frame your need and explain exactly how you plan to use the grant funds.
Grant applications require attention to detail. Be sure to respond to each question thoroughly and provide all the information that is requested. Grant-making organizations are, in general, interested in making a specific type of difference. By providing detailed information, you can help them determine whether funding your business will help accomplish their ultimate goals.
It’s crucial to provide all the requested information and details. But don’t forget to tell a story in the process. Everyone—including grant decision-makers—loves a good story. And by telling the story of your business (and maybe yourself), you’re likely to make a more memorable impression than if you simply provided facts and figures. Without getting too long-winded, try to let your personality shine through. Share the story of your business in a way that the decision-makers will feel like they know you. That way, they'll be more driven to help you reach your goals.
There is stiff competition for many business grants. Applying for a small business grant doesn’t mean you’ll receive the money, but it’s certainly worth a try.
Step Three: Fulfill Your Obligations
In most cases, grant recipients are required to use the funds in a specific way described in the application. When the grant award is made, it will likely include detailed requirements for using the money. Grant recipients are usually required to show documentation that demonstrates how the funds have been used, so be prepared to keep up with receipts and other documentation to show your use of the funds.
That documentation is important, as grant recipients who do not use the funds in the prescribed manner may be required to repay the funds.
Some grant programs also require grant recipients to attend events, participate in interviews, videos, or other public relations programs for the grant-making organization. Be sure to fulfill all parts of your commitment. After all, this organization is providing your business with much-needed capital. Jumping through a few hoops is all that's necessary in return.
If your business needs capital to reach its goals, take time to consider small business grants. Finding and applying for a grant can take some time, but if you receive the grant funds, which never have to be repaid, it will have been well worth your investment.