Small Business Grants: Where to Find Funding

Taking out a business loan or line of credit is one way to get the working capital you need to launch or grow your business. But there’s also another option to consider: a small business grant.

Awarded by government agencies, foundations, and corporations, small business grants provide funding to new and existing businesses of all types, and they do not have to be repaid. Some grants even come with added benefits like business coaching and mentorships.

Because grants are essentially free money, however, they can be difficult to get. Here’s what you need to know about small business grants.

What Is a Small Business Grant?

A small business grant is a lump sum of money awarded to a business or business owner that, unlike a small business loan, does not have to be paid back. Business grants are offered by federal, state, and local governments, as well as foundations, nonprofit organizations, and corporations.

Some grants are targeted to businesses in specific industries or that are developing certain types of products. Other grants are designed for businesses located in underserved communities or owned by women, minorities, or veterans. In some cases, a grant will come with stipulations about how the money has to be used by the business; in others, you can get a free grant to start a business with no restrictions.

Pros and Cons of Small Business Grants

Like any type of small business funding, grants come with both benefits and drawbacks. Here’s a look at how they stack up.

Pros

•   You don’t need to repay the money. By contrast to small business loans, grants do not have to be repaid, so they’re essentially free money.

•   Information is widely available. No matter what type of business grant you’re looking for, a lot of information about grants is available online.

•   Provides credibility. In addition to the funds, a grant can provide more visibility to your business and validate your business idea. It can also make it easier to receive other grants in the future, since you’re already a proven candidate.

Cons

•   Time-consuming. Just finding the right grant to apply for can require extensive research. And once you do find one, completing the grant writing process for a convincing proposal can take time and effort — and may not pay off.

•   Hard to get. Small business grants are appealing, so you’re not the only business looking for one. Grants typically receive a large number of applicants, but only a few are chosen.

•   Grant money for small businesses may have strings attached. Some grants come with restrictions about how you can spend the money, and others may require you to spell out your plans for the money in your application. Once you get your award, you typically need to stick with that plan.

Government Grants

There are so many different kinds of government business grants available — at the local, state, and federal level — that trying to find the right fit for your business can feel overwhelming. Fortunately, there are some helpful resources and databases that can help streamline your search.

Grants.gov

The U.S. Small Business Administration (SBA) and other federal agencies list their government grants for small business on Grants.gov. There, you can search based on criteria like eligibility, categories, and funding agency.

America’s Seed Fund

Through America’s Seed Fund, each year the National Science Foundation awards up to $2 million to roughly 400 technology startups. Any kind of tech is eligible for these grants, but your company must meet certain size and ownership requirements. Grant recipients get no-equity-required funding plus technical and entrepreneurial advice from program directors.

U.S. Department of Agriculture (USDA) Rural Business Development Grants

The USDA Rural Business Development Grant program gives out amounts ranging from $10,000 to $500,000 to support technical development, training, and strategy planning for enterprises in eligible rural communities. For-profit businesses need not apply; the grants are reserved for rural cooperatives, nonprofits, post-secondary educational institutions, and federally recognized tribes.

State Grants for Small Businesses

In addition to federal small business grants, state grants are available for businesses, too. Each state offers unique grant opportunities tailored to specific industries, needs, and demographics, supporting economic growth and innovation locally.

Here’s a comprehensive list of state grants for small businesses:

•   New York Small Business Grants

•   California Small Business Grants

•   Indiana Small Business Grants

•   North Carolina Small Business Grants

•   Michigan Small Business Grants

•   Florida Small Business Grants

•   Illinois Small Business Grants

•   Texas Small Business Grants

•   Arizona Small Business Grants

•   New Jersey Small Business Grants

•   Wisconsin Small Business Grants

•   Maryland Small Business Grants

•   Ohio Small Business Grants

•   Colorado Small Business Grants

5 Private Company Business Grants

Certain private companies offer small business grants. Below is a sampling of what’s available.

1. Visa Everywhere Initiative (VEI)

The Visa Everywhere Initiative (VEI) offers funding to tech-focused startups around the globe. To apply, you need to show how one of your products or services involves Visa products in a creative way. The top award is $100,000, but smaller amounts are also available.

2. NASE Growth Grant

The National Association for the Self-Employed offers a $4,000 grant to qualifying NASE members to help take their businesses to the next level. Grants can be used for marketing, advertising, hiring employees, expanding facilities, and other business needs.

3. Venmo Small Business Grant

The Venmo Small Business Grant awards 10 small businesses with $20,000, free promotion on the Venmo and PayPal web and social media sites, and professional consulting services. To qualify, you must have less than $50,000 in annual sales and no more than 10 employees.

4. Lenovo Evolve Small Grant

Lenovo’s Evolve Small Initiative is a program that provides funding, mentorship resources, and promotional support to small businesses in selected cities throughout the U.S. and Canada. Each year, the focus and funding amounts of the grant vary.

5. Allstate Main Street Grants Program

The Allstate Main Street Grants Program gives $20,000 unrestricted grants to 63 U.S. entrepreneurs each year. The grants, administered by the small business platform Hello Alice, are part of its selective “Boost Camp” business accelerator program, which provides education, planning resources, and networking opportunities.

4 Business Grants for Women Business Owners

Some grants are only open to women who run businesses. Below is a selection of available grants.

1. Cartier Women’s Initiative

The Cartier Women’s Initiative seeks women entrepreneurs whose businesses are making a strong social or environmental impact. In addition to grants of $30,000, $60,000, or $100,000, program fellows also receive business and financial coaching.

2. Amber Grant

WomensNet offers three $10,000 Amber Grants every month. These include startup grants and grants for specified business categories — as well as three $25,000 grants at year-end.

3. Tory Burch Foundation Fellows Program

The Fellows Program provides 50 eligible women running early-stage businesses with a one-year fellowship that includes workshops, coaching sessions, network-building, and financial resources.

4. The SoGal Black Founder Startup Grant

The SoGal Foundation, along with Winky Lux, bluemercury, and other sponsors, offers several $10,000 and $5,000 startup grants to Black women or nonbinary entrepreneurs. Grant winners also receive fundraising assistance and access to the SoGal Ventures team. Applications are rolling.

Recommended: 30 Small Business Grants and Grant Databases for Women

3 Grants for Minority Business Owners

Here’s a look at just some of the available awards for minority business owners.

1. Galaxy of Stars Grant

Galaxy of Stars, an online network for minority- and women-owned businesses, offers a grant of $2,950 to eligible applicants to start or grow a business.

2. The Fifteen Percent Pledge Achievement Award

Fifteen Percent Pledge, a business association dedicated to furthering Black-owned enterprises, provides three Achievement Award grants per year ($15,000, $35,000, and $200,000) to e-commerce entrepreneurs. To be eligible, an applicant’s business must have minimum annual revenues of $100K and no more than 15 employees.

3. Ingredients for Success Entrepreneurs Initiative

Co-sponsored by U.S. Black Chambers and the Famous Amos cookie brand, the Ingredients for Success program gives three early-stage businesses $50,000 cash plus a package of mentorship, networking, and educational resources. Companies must be at least 90% Black-owned and in operation for no more than five years.

3 Grants to Start a Business

While numerous donors focus on established companies, there are also many free grants to start a business.

1. Small Business Innovation Research (SBIR/STTR)

The Small Business Innovation Research (SBIR) initiative and its sister program, Small Business Technology Transfer (STTR), support small businesses with big ideas in technological innovation. The programs not only provide funding to qualifying small businesses, but also pair those small businesses with federal or academic research organizations to help develop the ideas into commercial products and services.

2. The Halstead Grant

The Halstead Grant is specific to a particular type of business entrepreneur — emerging silver jewelry artists. The grant includes $7,500 in funding plus $1,000 in merchandise to start a small business.

3. Challenge.gov

If you’ve got a great solution to an existing problem, you could submit your idea to Challenge.gov. This site is a hub for all prize competitions and challenges across the federal government and leverages crowdsourcing to come up with ideas that turn into businesses or new government operations.

How Do You Qualify for a Small Business Grant?

While each grant program will have different requirements for applicants, many share certain criteria.

If the grant is U.S.-based, applicants may be required to be U.S. citizens. If the grant is state-based, applicants may be required to be citizens of that state or doing business there.

Additional requirements for certain grants may include:

•   You may only qualify if you have been in business for a certain period of time.

•   You may need to operate a for-profit company (or, in some cases, the opposite: a nonprofit).

•   You may need to have a business in a particular industry.

The key is reading all of the qualification requirements carefully before applying. This allows you to make sure you meet the criteria before investing too much time in the application process.

The process of applying for a small business grant can be time consuming. You’ll want to write your business plan (if you haven’t already) or refine it. The plan should clearly explain your business and what sets it apart from other competitors, plus detail what you would do with the grant money. Small business grant applications may also require financial data and other relevant information for your business, so having that information organized and prepared can help streamline the process.

Alternatives to Small Business Grants

If you don’t qualify for any small business grants (or don’t feel it’s worth the time and effort to apply), you’re not necessarily out of funding options. For example, there are many types of first-time business loans to explore. Here are some other ways you may be able to get the capital you need to launch or grow your business.

Small Business Loans

There are many types of loans for small businesses. For example, the SBA helps businesses by backing up loans made by partner lenders. While banks typically have strict criteria (such as at least two years of business history and a minimum amount of revenue) for business loans, online business lenders tend to have more flexible requirements. Just keep in mind that rates from online lenders are generally higher than those from traditional banks.

Another type of credit designed for entrepreneurs is a startup business loan. Since the new company lacks business history, lenders generally look at personal and business credit scores, business age, revenue and cash flow, your business registration, and operating status.

A small business owner with unpredictable cash flow may benefit from a business line of credit, which can be drawn down as needed. Interest is charged only on the outstanding balance. Some lenders may offer an interest-only payment period, making the line of credit even more flexible.

Angel Investors

Angel investors are high-net-worth individuals who invest in early-stage startups in exchange for equity in the company. Since they invest using their own money, they aren’t beholden to banks or other institutions. This allows them to invest more freely. Typically, when an angel investor funds your company, you also get access to their expertise and industry contacts, which could help you grow your business.

Merchant Cash Advances

If you do business using credit card transactions, you may be able to get a merchant cash advance (MCA) fairly easily. With an MCA, you get a cash advance in exchange for a fixed percentage of future credit card receipts. Typically, the MCA provider automatically deducts a daily (or weekly) percentage of your debit and credit card sales until the advance, plus fees, is repaid in full. While an MCA can be a quick source of cash, this is one of the most expensive types of small business financing.

Recommended: Equipment financing

The Takeaway

No matter where you are on your business journey, there may be a grant or loan available to help you take it to the next level. Grants provide money that does not need to be repaid, unlike small business loans, which accrue interest and do need to be paid back.

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.

With one simple search, see if you qualify and explore quotes for your business.

FAQ

Which business grants are considered taxable?

Generally, the money you receive from any type of business grant is taxable and should be reported on your federal tax return. Depending on what state you live in, you may also need to report a business grant award on your state return.

How do you get small business grants?

Small business grants are offered by the government (at the federal, state, and local level), foundations, and corporations. You might start your search with the government database Grants.gov., as well as simply searching “Business [industry] grant.”

Who can get small business grants?

Grants are available for all types of businesses, but you may have a better chance of finding one if your company serves an underrepresented or rural community, is in the tech sector, or is owned by a woman, minority, or veteran.

What can small business grants be used for?

Many small business grants can be used for general expenses such as construction, technical assistance, marketing, and the like. Some grants, however, do require money to be used for particular purposes. For example, North Carolina’s Golden LEAF specifies that its grantees spend the money on workforce training.

How long does it take to get a small business grant?

The time it takes to receive a small business grant varies significantly. Application review can take from one to six months, and another month might elapse before grantees are notified. Working out the details of the agreement could require up to six more weeks. Even after the agreement is signed, it may take up to eight weeks to disburse the grant money for small businesses.

Federal and state grantors often post grant processing times on their websites.

---

Photo credit: iStock/mapodile

SoFi's marketplace is owned and operated by SoFi Lending Corp.
Advertising Disclosures: The preliminary options presented on this site are from lenders and providers that pay SoFi compensation for marketing their products and services. This affects whether a product or service is presented on this site. SoFi does not include all products and services in the market. All rates, terms, and conditions vary by provider. See SoFi Lending Corp. licensing information below.

This content is provided for informational and educational purposes only and should not be construed as financial advice.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.

Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.

SOSMB-Q325-001