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Small business grants can make starting a new business or growing an existing one easier. Unlike loans, which have to be repaid, grant money typically does not require business owners to pay it back.
Figuring out how to get a small business grant is the challenge. It can be complicated if you’ve never done it before, and the grant landscape can be competitive. Understanding more about what’s needed to qualify can help when you’re trying to get grant money for business initiatives.
Here’s an overview of grant options, plus tips that may help you find and secure the small business grant that will work for you.
Key Points
• To get a small business grant, start by researching grants from government agencies, private organizations, and nonprofits that align with your business goals, industry, and location.
• Carefully review the eligibility requirements for each grant, ensuring your business meets the necessary qualifications, such as size, revenue, or target demographic.
• A solid business plan is often required, outlining your goals and strategies as well as how the grant will help your business grow or achieve specific objectives.
• Write a clear, compelling grant proposal that directly addresses the objectives of the grant, explaining how your business aligns with the grant’s purpose and showcasing how the funds will be used effectively.
• In addition to small business grants, companies can rely on small business loans to get the funding they need to grow or maintain their business.
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What Is a Small Business Grant?
Small business grants are typically cash awards given out to help small companies get established, grow, or achieve entrepreneurial goals. The grantors may also offer mentoring, planning or other forms of assistance along with the money.
Types of Small Business Grants (Federal, State, Local, Private)
Ambitious entrepreneurs can find any number of ways to get grant money for business ventures. Federal, state, and local governments or agencies often fund small business grants, directly or indirectly. Some industry groups and associations sponsor grant competitions. Foundations set up by individuals or corporations frequently award grants to spur business development and entrepreneurship.
Most grants go to early-stage or fledgling companies, but in some cases you can get a grant to start a business.
Why Apply for a Small Business Grant?
The beauty of a grant is that it’s free money. Unlike a small business loan, there’s no repayment schedule, no interest charges, and no debt.
Also, because many small grants are awarded monthly or quarterly, more applicants have a chance of securing a grant. Such successes can help grant recipients build credibility for future grant applications.
Having your business’s financial files carefully compiled for grant pitches can be useful for future loan applications too. When you need to negotiate for, say, vendor financing or a business line of credit, you’ll have your documentation ready and you will have experience discussing it in detail.
How To Successfully Apply for a Grant in 7 Steps
Applying for a grant can be a long process, but taking it in stages can make it more manageable. Here are seven steps to get you to the finish line.
1. Get Familiar With the Grant Options
One of the keys to getting a small business grant is simply knowing what’s available. Some grant programs offer funding to any kind of business, whereas others may be more selective as to which types of business owners they support.
For example, when searching for grant opportunities, you may come across:
• Small business grants for minorities
• Business grants for disabled entrepreneurs
• Grants and loans for disabled veterans
• Grants for immigrant business owners
If your business fits into any of those categories, looking for relevant grants could help you find additional possibilities in your search for funding. (You may also run across lenders who specialize in minority business loans and other niche credit options.)
2. Know Where to Look for Grants
Grant money for small businesses can seem elusive unless you know where to look. A general web search can turn up some results, but there are a number of websites that aggregate different kinds of small business grant opportunities in one place.
Some of the options you might consider include:
• Grants.gov: This government-run website houses information on more than 1,000 grants as well as additional resources for potential applicants.
• GrantWatch: This subscription-based website allows you to search for grants using different criteria and provides information about other resources, like grant writer referrals.
• Minority Business Development Agency (MBDA): This government-run website lists some grant competitions as well as providing other resources for small businesses.
• Small Business Administration (SBA): The SBA is involved with some grantmaking, particularly in the area of research and development, and also grants funds to community organizations.
• USDA Rural Business Development Grants: The Rural Development division of USDA provides grants (and loans) to encourage the development of housing, healthcare, first responder services, utilities, and other essential services.
You can also research how to get a small business grant at the local or state level. Your city’s chamber of commerce or state business development agency may be good starting points for finding grant opportunities.
3. Review Individual Grant Criteria
When it comes down to applying for small business grant funding, researching the qualification criteria is critical. This can help you pinpoint the grant opportunities you’re most likely to qualify for, while weeding out ones that aren’t a good fit.
Every grant is different, and again, one of the main criteria for a specific grant might be whether you operate a woman-owned business, belong to a minority group, or have veteran status.
Beyond that, however, consider other minimum qualifications, such as:
• Time in business
• Type of industry
• Annual revenues
• Number of employees
• Planned use for grant funding
Like startup business loans, some small business grants may be aimed at early-stage companies, while others may be geared toward helping established businesses grow. Some grants may place conditions on how the money can be used to further business activities.
These are all things you should know before starting on any grant writing project. If you and your company aren’t eligible for a given grant, applying for it wastes your time and effort.
4. Know What Registrations You May Need to Apply
Depending on the grant program, you may need to register your business before you can apply. For example, applications can require any or all of the following:
• Federal employer identification number (EIN)
• DUNS number
• SBA-certified small business or woman-owned business documentation
• Business license or articles of incorporation
If you’re applying for grants through a portal like Grants.gov, you may also need to register for an account with the site first. Make sure you have all the necessary registrations in place before you apply; it can save you time later.
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5. Update Your Business Plan
It’s typical for lenders to ask to see a copy of your business plan when you’re applying for loans. For SBA loans, for example, lenders will require a business plan when considering your application.
It’s not uncommon to need an updated business plan when you’re trying to get grant money for your small business. If you haven’t updated your business plan recently, or if you’ve never drafted one, that’s one more thing to cross off the list before you apply for funding.
A business plan should contain certain details about how you run your business. The basic format typically includes:
• An executive summary
• Company description
• Market analysis
• A description of your organization and management
• Details about your products or services
• Financial projections and expected growth
Remember that getting a business grant can hinge on how you present your business. Your multi-year business plan, along with the details you include in your application, is your chance to make a strong case for why you should receive funding.
6. Complete the Grant Application
Perhaps the most important step in how to get a small business grant is filling out the application. This part of the process can take days or even weeks, depending on how extensive the application is and what the grant-making organization requires in the way of supporting documentation.
Here are some tips to keep in mind as you fill out the application:
Know your due dates
Grant applications often have deadlines and you don’t want to miss out on a chance to secure funding. Make note of when the application is due and give yourself plenty of time to complete it.
Read it through at least once
Give the application a thorough review so you know what’s covered and what you’ll need to provide when you’re ready to submit it.
Be truthful
Avoid including inaccurate or misleading information on your application, since that could cause you to be disqualified for grant funds.
• Be thorough. One thing to note about how to apply for small business grant money is that less is not more. In other words, if the application asks for a detailed description of how you plan to use the money, then don’t offer up a one- or two-sentence explanation.
• Don’t leave anything out. If a grant application asks for specific documentation, such as a copy of your business plan or a recent profit and loss statement, don’t fail to include it. An incomplete application could be rejected right off the bat, so make sure you’re submitting all requested documents.
Before you hand in your grant application, proofread it for spelling or grammar errors and correct any you find. You may also want to have someone who’s experienced with small business grants or grants in general look it over, as well. You could also consider hiring a grant writer to review your application. A second set of eyes may discover overlooked mistakes or areas you could improve.
7. Follow Up if Appropriate
Once you’ve sent in your grant application, the waiting game begins. The application review and approval process can take weeks or even months, depending on the grant.
During this time, you may want to reach out to the grant organization and check up on the application. Specifically, you could ask if there’s any additional information or clarification needed as your application is being reviewed.
You don’t want to be a nuisance, but following up could help you get a small business grant if it keeps you on the grant-maker’s radar.
Common Mistakes to Avoid When Applying for Grants
When gathering information on how you can get a grant to start a business or support one, it’s crucial to thoroughly understand each funder’s requirements. For example, as noted above, if the application asks for a detailed discussion about how you plan to spend the money, writing just one or two sentences won’t suffice. Here are some other pitfalls to avoid.
Ignoring Grant Guidelines
Even if your application is strong, it could be automatically rejected if it fails to adhere to strict guidelines and deadlines. These could be as basic as formatting rules or page count. They could also encompass broader concepts such as eligibility requirements and alignment with the funder’s mission.
Submitting Incomplete Applications
Make sure you’re submitting all requested documents so that your application won’t be rejected right away. Required documents, such as your business plan or recent balance sheets, are a must. Other essentials to include are a well-structured project timeline and a comprehensive budget that explains each line item.
Underestimating the Competition
Grants are usually highly competitive, with many qualified businesses vying for the money. It’s prudent to research other businesses applying for similar grants to see what they bring to the table and how you could constructively set your application apart. The more impressive the other candidates are, the stronger your application will need to be.
Resources to Help You Apply for Small Business Grants
You don’t have to go through searching and applying for business grants all by yourself. Many resources exist to help you along the way. Here are a few important ones.
• Online grant databases: In addition to Grants.gov and the other websites mentioned above, there are many small business grant databases. State and local governments, corporations, foundations, interest groups, and business development agencies are some of the entities that list grants online.
• SCORE and Small Business Development Centers: SCORE is a nonprofit partner of the U.S. Small Business Administration (SBA) with locations nationwide. It offers a slew of free mentoring and training, including workshops on grant writing. Small Business Development Centers, also sponsored by SBA, provide small business owners with counseling and support; advisers there can help entrepreneurs access capital and improve financial management.
• Local chambers of commerce: Networking with other business owners in your area may help you find peers who have grant experience and can advise you. You may also learn about local grant offers you might have overlooked.
The Takeaway
Grant money for small businesses can be a financial lifeline if you’re hoping to launch a new venture or grow a business you already have. Understanding the details of how to get a small business grant can help you find the best grant options and deliver the strongest application possible.
If you’re seeking financing for your business, SoFi is here to support you. On SoFi’s marketplace, you can shop and compare financing options for your business in minutes.
FAQ
What are the eligibility requirements for small business grants?
Eligibility for small business grants typically depends on factors like the size of the business, location, industry, and the purpose of the grant. Many grants also require that the business meets specific criteria, such as being independently owned or serving a particular community or demographic group.
How do I find small business grants?
You can find small business grants through government websites like Grants.gov, local chamber of commerce listings, and nonprofit organizations. Additionally, private corporations and foundations often offer industry-specific or competition-based grants to support business innovation or community development.
What is the application process for small business grants?
The application process generally involves filling out a detailed proposal or application form, providing financial documents, and outlining how the grant will be used to support business growth or specific projects. It’s important to follow the grant guidelines carefully and submit all required documentation to increase your chances of approval.
Can I reuse my application for different grant programs?
You can certainly reuse factual information on many different grant applications. This might include your business’s background, financial details, and how you plan to use the funds. Otherwise, though, it’s best to tailor your application to the specific grant and funder, so that you make a strong and personalized case with each submission.
How long does it take to hear back about a grant decision?
Each grant has its own timeline for approval and notification, and it varies by funder. Federal and state grantors often post their processing times on their public websites. Foundations’ review schedules can range from 30 days to eight months.
Photo credit: iStock/sakkmesterke
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