Small Business Grants: Everything You Need To Know About Them

There are numerous expenses for a small business, including testing new products, studying market trends, and acquiring inventory. However, how will you make money if you have not even begun selling?

Experienced small business owners may have a network of bankers, but obtaining funding before you have a chance to prove yourself can be challenging for emerging entrepreneurs. 

Many business owners consider getting a small business loan or line of credit when they need a financial boost. However, depending on your specific situation, a business grant might be more appealing than conventional funding options.

Even though it might seem like nothing in this world is free, that is not always the case when it comes to grants for small businesses. 

Since you do not have to pay it back, this funding source is essentially free money (free grants to start a business). The only issue is that applying for and receiving a grant can take time and effort.

Furthermore, not all small business startup grants are appropriate for every type of business, so it is crucial to comprehend how grant-making organizations assess applicants if you want to be successful in getting the funding you require.

In this guide, we will explore everything you need to know about small business grants. Let's first begin with what they are!

What is a small business grant?

Small business grants offer small investments to startups and other smaller businesses, ranging from a few hundred dollars to a hundred thousand dollars or more. This is an excellent first step if you are not ready to go through a more formal and complex venture capital funding process. Governmental organizations, nonprofit organizations, and the social responsibility departments of large corporations can all provide grants. 

They typically do not demand repayment (like loans) or other compromises like equity or a say in how your company is run (like traditional investors). Small-business grants can be used to start a business, improve its operations, or support its expansion. 

However, these grants for small business are not merely gratuitous funds. If the funds are not used following the terms of the grant, they must be returned—possibly with interest. Grant eligibility varies depending on the organization providing it, so before applying, ensure your company meets the size, industry, and demographic requirements for that grant.

How do small business grants work?

Small business grants are not given out lightly. They follow a set procedure, and the journey can be lengthy. The government has a concept known as the "grant lifecycle," which consists of three major phases:

• The Pre-Award Phase comes first. The government decides what it wants to fund at this point, makes the grants public, and invites applications.
• The Award Phase comes next. Here, applicants learn whether or not they have been accepted. If approved, they work with the government to iron out the financial details before receiving the funds.
• Next comes the Post-Award Phase. A grants management officer monitors the situation here. They ensure the grant is used correctly by conducting regular checks and audits.

The grant is closed once the objectives are attained and the money is appropriately spent. The monitoring for non-federal grants may differ slightly, but the basic procedure is essentially the same. So, whether it is federal or not, there is a procedure to follow.

Types of small business grants

There are two kinds of grants: government and private.

You can search government databases for federal and state grants based on your location and industry. These are like free government loans. However, these are frequently outdated and poorly organized paid services.

Corporations also offer grants for small businesses. Private grants typically have less stringent application requirements but more competition for funds.

Applying for a foundation grant is another option. This is a different kind of private grant, but this time, the grant money will come from a charitable foundation rather than a company.

Let us go over them in more detail:

Federal grants for small business start-up

Governmental organizations are heavily involved in distributing government small business grants – supporting various businesses, from those who provide child care services to those dedicated to environmental preservation. Applying for these grants may appear complicated, but they offer valuable opportunities for small-business owners looking to expand their operations. 

There are several types of federal grants available, including:

Grants.gov: It is a comprehensive database of government small-business grants handled by several federal departments, including the Department of Education and the Department of Veterans Affairs.

Small Business Innovation Research and Small Business Technology Transfer Programs: The SBIR and STTR grant programs promote scientific and technological research and development. Through these initiatives, small businesses can access the federal grants and contracts offered by 12 government agencies. Your company must operate profitably, employ at most 500 people, and adhere to other strict criteria to be eligible. 

USDA Rural Business Development Grant: The US Department of Agriculture (USDA) oversees the Rural Business Development Grant program, which aims to provide funding to support and strengthen small businesses in rural communities. Companies must be located in an eligible rural area, hire no more than 50 new employees, and make less than $1 million in gross revenue to qualify. Typically, applications are accepted once a year through USDA Rural Development's local or state offices.

Program for Investors in Microentrepreneurs: While the Small Business Administration (SBA) typically does not directly extend federal grants to small businesses, the Program for Investors in Microentrepreneurs (PRIME) does. It provides funding to organizations that support the development of microenterprises. These organizations can be either private nonprofits or run by state, local, or tribal governments. Their goal is to assist underprivileged microentrepreneurs.

State Grants

State governments also offer government grants for small businesses. These grants are generally available through state agencies, where there may be less competition due to a smaller applicant pool. Although it may seem like some state grants are only available in one state, it is essential to carefully review the details before excluding one because it appears outside your geographic area. Following are a few examples:

State Business Incentives Database: For business owners, the State Business Incentives Database is a valuable tool. It has a map function lets you choose your state, view the number of available grants, and see details about tax breaks and exemptions. However, only Council for Community and Economic Research (C2ER) members can access this database since it requires a login. The annual cost of a basic membership with database access is $362.

US Economic Development Administration (EDA): The EDA is a division of the US Department of Commerce. The EDA works with local governments and regions nationwide to promote economic growth. It offers grants and collaborates closely with local communities to support entrepreneurship and innovation.

Small Business Development Centers (SBDCs): Any business grant's research and application process can be daunting, but SBDCs are here to help. With nearly 1,000 development centers nationwide, entrepreneurs can get free consulting and training on various topics, including cybersecurity and digital advertising. SBDC consultants can assist you in identifying and applying for the best grants for your company.

Corporate Small-Business Grants

Businesses usually place much emphasis on developing a favorable public image, and philanthropy is one way to do this. This may take the form of grants given to deserving causes, often nonprofit organizations. But it can also apply to grants for small businesses. Here are some examples: 

Visa Everywhere Initiative: The organization that created the widely used credit card hosts a global competition for fintech startups from five different geographic areas: North America, Asia Pacific, Europe, Latin America, as well as CEMEA. They compete for the $50,000 Overall Winner grant. Visa is particularly interested in businesses that offer consumers and businesses innovative payment and commerce solutions. Keep in mind that applications for 2023 are now closed. So, keep an eye out for the 2024 application period.

FedEx Small Business Grant Contest: The renowned delivery company offers grants to small businesses to help them grow and improve. A company must be for-profit, have a valid FedEx business shipping account number, use FedEx for shipping, and have fewer than 99 employees to qualify. Ten small businesses received grants totaling $30,000 in 2023 and $1,000 worth of FedEx Office print services.

Venmo Small Business Grant: Twenty deserving small businesses receive $10,000 in free funding as part of the Venmo Small Business Grant program. Along with the funding, it also provides mentorship from top business executives and open promotion on the Venmo website and social media accounts. To qualify, you must have a US Venmo account and keep an active, legitimate business profile on Venmo. Additionally, your company should have annual sales of no more than $50,000 and no more than ten employees. 

Amazon Small Business Grant: Every year, the program offers free grants to small companies with an Amazon Business account and annual revenues of $1 million or less. 15 businesses receive grants from this program in the amount of $15,000 to $25,000 each. Additionally, winners may be eligible for a free year of Business Prime membership and Eero WiFi and Kindle Scribe products. 

Small Business Growth Fund: The Global Entrepreneur Fund and Hello Alice work together each year to run the Small Business Growth Fund, supported by Etsy and Progressive. Its objective is to help business owners grow their operations. 

US Chamber of Commerce Top Small Business Awards: The America's Top Small Business Awards honor small businesses for their contributions to the American economy and provide a grant of $20,000 to each winner. Additionally, the competition awards prizes to businesses in several categories, including emerging businesses and green/sustainable businesses. Although you must already have a business to be eligible, it only needs to have been running for a year. 

Small business grant alternatives

It can be challenging and time-consuming to find the right grants for your small business and to apply for them. There are other options for financing your business if you do not meet the requirements for some grants. Here are some options to consider:

• Small business loans: Evaluate your financing needs and compare loan options, such as bank loans, SBA loans, business lines of credit, term loans, and equipment financing. 
• Small business credit cards: Find the best option for financing your routine business purchases by comparing dozens of cards and earning rewards.
• Crowdfunding for business: Leverage the power of the internet to promote your goods or services through a crowdfunding campaign to raise money for your small business.

How do you apply for a small business grant?

Applying for a small business grant is simpler than you might imagine. It does take some time and effort, but if you can manage your business, you can manage the application process.

Although each grant application process is unique, the following general guidelines will give your application a good chance of success:

• Begin by applying for grants that are relevant to your business type.
• Review the grant's terms and conditions in their entirety.
• To ensure you do not miss this crucial deadline, mark the application's due date on your calendar.
• Be mindful of the language used in the grant, whether formal or informal and model your application language afterward. The grant and your company will become more naturally aligned as a result.
• Outline your application, indicating the points you want to emphasize in each section. Present your company in a way that complies with the grant's specifications.
• If you need help completing your application, look online for resources and advice.
• Once your application is finished, submit it and keep a positive attitude because it might take some time to hear back.

How can Virtual Assistants help with small business grants?

Small businesses can benefit greatly from the help of virtual assistant when it comes to applying for and managing grants. Want to feel super powerful like these people? Hiring a VA is the key!

Here are some ways virtual assistants can be useful:

Research and identification: Virtual assistants can research and identify appropriate grant opportunities for your company. They can search government websites, corporate grant programs, and nonprofit organizations for potential grants that match your company's goals and needs.

Assistance with grant applications: They can help fill out application forms, gather necessary documentation, and ensure that all submission guidelines are strictly followed. This can help you save time while ensuring your application is complete and accurate.

Document management: It can be tough to keep track of grant-related documents, deadlines, and communications. Virtual assistants can help you organize and manage grant paperwork, track submission deadlines, and keep track of correspondence with grantors. 

Follow-up and communication: After submitting a grant application, following up with grantors and staying in touch is critical. Virtual assistants can assist with follow-up email inquiries and provide any additional information that grantors may require.

Grant calendar management: Keeping track of multiple grant applications and deadlines can be difficult. Virtual assistants can create a grant calendar to ensure you do not miss important submission deadlines.

Grant reporting: If your company is awarded a grant, virtual assistants can help you prepare the necessary reports and documentation to show how the grant funds were spent and their impact on your business.

Compliance: Grant requirements and regulations may change over time. Virtual assistants can keep you updated on compliance issues and ensure that your company meets the grant's eligibility requirements throughout the grant period.

Financial management: Virtual bookkeeping assistants with financial expertise can assist you in managing grant funds, tracking expenditures, and keeping accurate financial records to ensure grant compliance.

Project management: If the grant includes specific projects or initiatives, virtual assistants can assist with project management tasks such as coordinating activities, monitoring progress, and reporting project milestones.

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Key Takeaways

The hardest times for starting a business are frequently those first few months. Although it takes time to become profitable, costs can mount up quickly.

Small business start-up grants can be a lifeline for startup entrepreneurs. You are probably a great candidate for a small business grant if your company has the potential to innovate in your industry and develop new technologies for the benefit of the general public.

Need help with all the associated research and other administrative hassles? Contact our team today by booking a free consultation start-up or mailing us at [email protected].

FAQs related to Small Business Grants

How can I get money to start a business?

The search for startup capital requires looking into a variety of options. Many business owners use grants to start a business. Some start out with their own money or assets, giving them complete control over the initial investment. Additionally, flexible financial support can be given by friends and family. A strong business plan and assets may be needed to secure traditional bank or credit union loans. For high-growth potential businesses, venture capital or angel investing firms may be interested in providing funding in exchange for equity.

Is the SBA grant real?

Yes, but the SBA does not offer grants for starting or expanding a business. The SBA awards grants to nonprofit, Resource Partners, and educational organizations that promote entrepreneurship through counseling and training programs. 

What is the most common grant?

The most common grant type may change based on the situation and sector. Small business grants are quite common in the business world, especially for startups and companies with particular goals like R&D or community improvement. However, the acceptance of grants may differ by area and industry.