Daymond John, renowned Shark Tank investor, once said, “No matter what business you’re in, business is business and financing and money are critical.”
Business financing is often a sore point forsmall businessownersbecause it is difficult to acquire. Get a loan and pay high interest rates. Get an investor and reduce your equity. The gains of sourcing financing can be lost when the stakes are so high.
Thankfully,small businessgrantsprovide a solution that removes the risks associated with high interest rates and lost equity.
What aresmall businessgrants?
Asmall businessgrantis a predetermined sum of money thatgovernment agenciesand/or private entities give tosmall businesses. It can loosely be called “free money.” It’s important to note, however, that nothing in life is truly free.Small businessgrantsare filled with caveats that specify how the money should be spent. Additionally, a lot of work goes into creating grant proposals and meeting the requirements for winning the grant.
Why aregovernment grantsforsmall businessesso important in 2022 and beyond?
Government grantsforsmall businessesare particularly important for developing a country’s micro, small and medium enterprises (MSME) sector. Because these grants are funded by tax dollars, they have more restrictions than grants offered by private entities likeFedExandCartier, as well as foundation grants like WomensNet’sAmber Grant.
Chief amongst these restrictions is an emphasis on how the money will be used to help the business make a meaningful impact in the community. Grants from thefederal governmentwere created to encourage businesses to be community builders and contribute to economic growth. A business that focuses on community development and innovation is sustainable and respected. This is the primary reasongovernment grantsforsmall businesseswill remain relevant in 2022 and beyond.
Furthermore, manygrant opportunitiestend to reward innovation and scientific research. More grants tend to be offered in these categories because they give the country a competitive advantage. After all, it pays to stay ahead of the game.
Find more information onHow to Start a Business here.
Arefederalsmall businessgrantsbetter thansmall businessloans?
It depends.Small businessgrantsandsmall businessloanseach have their place insmall businessfinancing. Your choice depends on:
- How quickly you need the funds
- Whether you are working on a single project or multiple projects
- Ability to repay the loan
In an ideal world, asmall businesswould be fully self-funded and self-sustained. In fact, this is the recommendation forstartup businesses. However, there may come a point at which additional funding is needed to facilitate business growth. The table below explains the pros and cons ofsmall businessgrantsfromfederal agenciesandsmall businessloans, so you can determine which funding option makes most sense for your business.
|Small Business Grants||Small Business Loans|
How can I get a governmentsmall businessgrant?
These are the steps for getting asmall businessgrant:
- Assess the grant-giving entity
- Identify the problem you are attempting to solve
- Write and submit a grant proposal.
- Carry out the necessary follow-up actions as stipulated by the grant-awarding entity.
Assess the grant-giving entity
Federal grantsforsmall businessesare a good way to get access to “free” money. However, your grant funding application has a greater chance of success if you ask these questions about the government entity that’s actually awarding the grant:
- Does this government entity’s vision align with your company’s vision?
- What is the motivation behind awarding this grant?
You are more likely to stick with thegrantapplicationprocess and create a strong proposal if your business’ vision and motivation aligns with those of the grant-awarding government entity.
Identify the problem
Each governmentsmall businessgranthas its own requirements that relate to a community-specific problem. These requirements are detailed in theFunding OpportunityAnnouncement (FOA). You have a better chance of securing the grant if you clearly understand this problem and how your business can use the grant funding to solve it.
Some questions you should answer include:
- How many people does the problem impact?
- Has anyone attempted to solve the problem with any measure of success?
- Are any negative effects possible as a result of the changes you will make to solve the problem? How can you mitigate these negative effects?
Write and submit a grant proposal
Various governmentsmall businessgrantsexist that provide funding for a wide range of problems. Some of these governmentsmall businessgrantsare discussed later in this article. Each grant has specific requirements; you should ensure that your business can meet these requirements before investing time and money into creating a grant proposal. It often works best to hire a grant proposal writer because writing a grant proposalis a time-consuming and detailed process.
You have won the grant. Awesome! Now is the absolute best time to develop a relationship with the grant officer. Doing so will help you better understand what this person expects and how deliverables should be presented. Ask questions so that you’re in-the-know with timetables, and be sure to keep lines of communication open.
What are the 10 bestgovernment grantsforsmall businesses?
Small BusinessInnovation Research(SBIR) program
Thisgovernment grantis awarded to businesses making strides in technology innovation. Funds are provided for research and development with additional support being given for the commercialization of the technology or service created.
The grant began in 1982 as a part of theSmall BusinessInnovation Development Act and has provided funding for a variety of companies in the defense, environment and healthcare industries. Funds are obtained from theFederal Researchand Development Project. Anysmall businessthat is awarded this grant must complete the three phases of the program to receive the full grant award.
- Phase I– The budgetary allocation for this phase does not usually exceed $150,000. TheFederal Researchand Development team determines whether your project is truly viable.
- Phase II– The results of Phase I determine the funding requirements for this phase. Funding usually does not exceed $1,000,000 and is dispersed over a two- year period.
- Phase III– This is a non-funded phase where the product is commercialized. Othergovernment agenciesassociated with the project may be the main consumers.
Small BusinessTechnology Transfer program(STTR)
TheSTTRprogramis similar to theSBIRbut the emphasis is more on establishing public and private sector partnerships in research and development. Thisgovernment grantforsmall businessescreates opportunities forsmall businessesto collaborate on joint ventures with the nation’s leadingnonprofit organizations. The products produced are commercialized and some, or all, of the profits given to thesmall business. Like theSBIRprogram, anysmall businessthat receives the grant must complete three phases to receive the full grant award.
USEconomic DevelopmentAdministration (EDA)
The EDA is mandated to fostereconomic developmentin all US communities.Grant moneyis part of the solution and can be viewed on theEDA website, which is constantly being updated to reflect recentfunding opportunities. For example, the most recentfunding opportunitylisted is the Fiscal Year 2020Public Works and Economic Adjustment Assistance Programs. This grant provides $587 million infunding opportunitiesforsmall businessesaffected by natural disasters in 2018. Clicking the link redirects you to theGrants.gov website, where you can view details about the grant.
State Trade Expansion Program (STEP)
The STEP is acollection ofgovernment grants, and other support; the Small BusinessAdministration(SBA) can offer assistance with obtaining or understanding STEP. This program focuses specifically on helpingsmall businesseswith export development. Grants are awarded to state entities.Small businessescan then apply to programs offered by these entities so that they can benefit from export development opportunities. Feel free to send an email to [emailprotected] to better understand how your business can benefit.
USDepartment of Agriculture grants (USDA)
USDAgrantsfocus on agricultural development inrural areas. Some of thegovernment grantsoffered include:
- RuralEconomic DevelopmentLoan &Grant Program
- Rural Energy for America Program Renewable Energy Systems & Energy Efficiency Improvement Guaranteed Loans & Grants
- Rural Microentrepreneur Assistance Program
- Socially-Disadvantaged Groups Grant
- Strategic Economic and Community Development
- Telecommunications Infrastructure Loans & Loan Guarantees
- Value-Added Producer Grants
National Institute of Standards and Technology grants (NIST)
NIST is a division of the USDepartment of Commercethat provides technology, measurement, and standards to position the US as a world leader in technology. Allgovernment grantsoffered by this agency are forsmall businessesin the information technology (IT) industry. A Notice ofFunding Opportunity(NOFO) is posted on the NIST website with a link that directs you to further details on theGrants.govpage.
Department of Education grants (DOE)
The US DOE offersvarious grantsfor education-relatedsmall businesses. The most recent grants on the DOE website focus on meeting the needs of students with disabilities and accurately collecting, reporting and analyzing student data. Some grants are reserved for public schools and state-owned education agencies. However, there are some that are open to private non-profit education-relatedsmall businesses. Details about these grants are provided on the DOE website.
Environmental Protection Agency grants (EPA)
The EPA is an advocate for the health of US residents and the environment. Scientific research forms the core of many of their endeavors. Thegovernment grantsoffered exclusively by the EPA cover environmental issues such as climate change, state-led climate activities, air quality, transportation, contamination, internet database management, diesel emissions, Great Lakes water quality and pollution. Specific details about the grants can be found on the EPA website.
National Oceanic and Atmospheric Administration (NOAA) grants
The NOAA is a division of the USDepartment of Commercethat monitors the weather, climate, fisheries management, coastal restoration and marine commerce of the US. This unique USDepartment of Commerceagencyoffers grantsthrough theSBIRprogram. This grant aid provides funding for relevant products with strong commercial potential.
This is not a specific grant. Instead, it is awebsitethat offers a wide selection ofgovernment grantsacross various industries. You are able to view grant requirements, start dates, end dates and submission requirements. You can also narrow your search to identify grants specific to your industry.
What are the bestgovernment grantsfor women-ownedsmall businesses?
Women’s Veteran Entrepreneurship Training Program (WVETP)
TheU.S.Small BusinessAdministration(SBA) offers funding to higher learning organizations that are interested in including theWVETPin their course offerings. A woman who runs a non-profit entrepreneur training agency can also apply for this grant. The WVETP is specifically tailored to women service members, women veterans and women military spouses who either want to start – or already have – asmall business.
Each state has anSBDCthat offers assistance in obtaining financing, whether conventional or SBA guaranteed. While they don’t offer grants themselves, they do help with SBIR and STTR grant proposals, and may otherwise be a fantastic source of knowledge on funding for your small business. You should visit your local SBDC to get more information and see how they may be of help to you.
Additionally, SBDC offers Women’s Business Centers (WBC) that provide complete 360-degree support for small businesses and aspiring entrepreneurs in the form of free business consultations from astute business professionals. These WBCs are formed as a partnership between the SBA and private sector entities through the support of leading colleges and universities. They are great places for business knowledge acquisition and funding opportunities.
Government grantsforsmall businessesdemonstrate the government’s commitment to the development of all US communities. Most of thesegovernment grantscan be found on theGrants.govwebsite, which is regularly updated.
Only apply for agovernment grantif you do not need the funds immediately, have a specific project that can benefit from grant funding, and are willing to hire an expert to help you write a strong grant proposal. Otherwise, the time and resources that you spend applying for the grant will be futile.
- Competitive Grants. Competitive grants are those for which a nonprofit submits a proposal that gets evaluated by a team of reviewers. ...
- Continuation Grants. ...
- Pass-through Grants. ...
- Formula Grants.
A real government agency won't ask you to pay a processing fee for a grant that you have already been awarded—or to pay for a list of grant-making institutions. Specifically, Federal government agencies and employees never ask people to wire money or use a prepaid debit card to pay for anything.What is the most common grant? ›
This is the most common type of grant. Program/project grants specify that funding may only be used to support the program or project referenced in your proposal.
Local Councils could also inform about numerous opportunities for funding, offer financial advisory and facilitate access to grants and small business loans for local businesses. Local government could also organise systems of raising funding for local businesses that could go into grants.What are the three federal grants? ›
Grants: There are three common types of federal grants: formula, project, and matching.What is a Bemis grant? ›
The Resilient & Inclusive Communities Fund is a small grant programme from BEMIS, funded by Foundation Scotland from the Response, Recovery and Resilience Fund, for diverse Ethnic Minority community groups and organisations to set up programmes and services supporting disadvantaged and excluded communities.What are the chances getting approved for a grant? ›
What are your chances of being awarded a grant? On average, sources state that 1 in 10 applications are approved for funding.Does the government give random grants? ›
The federal government does not offer grants or “free money” to individuals to start a business or cover personal expenses, contrary to what you might see online or in the media. Websites or other publications claiming to offer "free money from the government" are often scams.Do you have to pay back a grant? ›
They are not loans. However, if you were not entitled to receive the grants, you will need to pay them back. You can also voluntarily repay some or all of the grants.Is there a 700 grant? ›
Sassa warned individuals that the post advertising the R700 grant is fake, as the agency does not offer a R700 grant. They have warned individuals against providing their personal information as it could be used for unscrupulous purposes. The agency said, “Please be aware of the below fake news.
Basic Grant means an Option granted to a Non-Employee Director who meets the specified criteria pursuant to subsections 6(a) or 6(b) of the Plan. Sample 1. Basic Grant means the difference between a school division's total recognized expenditure and total recognized revenue; Sample 1.What's the highest grant you can get? ›
Amounts can change yearly. The maximum Federal Pell Grant award is $7,395 for the 2023–24 award year (July 1, 2023, to June 30, 2024).What does the government give to businesses? ›
The federal government offers grants, contracts, and small business loans to help small businesses get started. Grants are financial aid that doesn't need to be returned, while loans require repayment with interest.Which type of assistance is provided by the government to small business? ›
Small industries receive various benefits from the government of India such as Land, Power, Water, Sales Tax, Octroi, Raw materials, Finance, Industrial estates and Tax holiday. Even though enough importance is given to backward areas and small industries, there is still an imbalance in their economic growth.Are federal grants hard to get? ›
Obtaining a government grant is a very difficult task. The application process is lengthy, and applicants must explain how the funding will help the local community or the general public. Because writing a convincing proposal is so difficult, many applicants seek expert assistance.What are 10 programs that you use that receive federal funding? ›
- Supplemental Nutrition Assistance Program (SNAP) ...
- Health Insurance Marketplace. ...
- Medicaid. ...
- Child's Health Insurance Program (CHIP) ...
- Subsidized Housing, Housing Vouchers, and Public Housing Programs. ...
- Supplemental Security Income Program (SSI) ...
- Welfare or TANF. ...
- No-cost internet through the Affordable Connectivity Program (ACP)
Medicaid is not only the largest of all grants to states; it is also the largest category of grants in all but one state.What is a Carnegie grant? ›
Carnegie Corporation of New York is a proactive grantmaker. Program staff identify organizations to implement projects that are designed to help the foundation attain its various programmatic goals.What is UGA grant? ›
The UGA Completion Grant provides one-time financial aid support to undergraduates who have one semester remaining to graduate.What is federal grant aid? ›
Grants are gift aid from federal, state, or university sources. They are awarded to students based on need, and they DO NOT NEED TO BE REPAID. You must complete the FAFSA or DREAM ACT application to be considered for grant awards. Grants require enrollment in 12 UNITS to maintain maximum eligibility.
Still, even grants can be difficult to obtain if you have poor credit history. Fortunately, though it may take extra legwork, landing a grant despite a poor credit score isn't unheard of.Why do grants get denied? ›
The most common reasons for proposal rejection boil down to a surprisingly small set of simple and familiar failures: Deadline for submission was not met. Proposal topic was not appropriate to the funding agency to which it was submitted. Guidelines for proposal content, format, and/or length were not followed exactly.What is the average grant amount? ›
|Type of Aid||Average Amount|
|Federal Direct Stafford Loan||$5,800 (dependent) $7,630 (independent)|
|Federal Supplemental Educational Opportunity Grant||$670|
|Total Federal Student Aid||$13,120 (dependent) $14,950 (independent)|
They are a Short-Term Solution
While they are a good financial boost initially, government grants are unsustainable as they are merely a short-term option. This means that you cannot rely on them to keep you afloat for long periods of time.
The Nationwide Community Grants programme awards grants of up to £50,000 to local housing projects that will strengthen local communities by supporting the most vulnerable by: Preventing people from losing their home. Helping people in to a home. Supporting people to thrive within the home environment.What happens to grant money if you dont use it? ›
The school will issue you a Pell Grant refund if some of your grant dollars are unused. You may receive a check for the remaining amount, or the school may transfer it via direct deposit into your bank account or student account.Do grants affect your tax return? ›
Generally, you report any portion of a scholarship, a fellowship grant, or other grant that you must include in gross income as follows: If filing Form 1040 or Form 1040-SR, include the taxable portion in the total amount reported on Line 1a of your tax return.Do you keep leftover grant money? ›
Typically, the school first applies your grant or loan money toward your tuition, fees, and (if you live on campus) room and board. Any money left over is paid to you directly for other education expenses.Is 350 grant still available? ›
The SRD grant was due to come to an end in March 2023. However it was announced that it will be extended by at least one year. An amount of R44 billion has been allocated to allow for this extension of the Social Relief Distress (SRD) grant for 10.5 million beneficiaries monthly.How do you get a 350 grant? ›
- Bank account. One of the ways in which you can receive your R350 grant is through a bank account. ...
- CashSend Services. Should you not have a bank account, you can also receive your R350 grant through a CashSend. ...
- Checkers, PicknPay & Boxer Stores. ...
- Shoprite Group.
The Post Office
Beneficiaries of social grants like the child support grant, older persons grant, disability grant and the child support grant are able to use it as a collection point. If you opt to collect your R350 grant at the post office, you are encouraged to wait for an SMS confirming your money is available.
A Universal Basic Income Guarantee is something that all people (usually within a certain age range, for instance: all adults or all working-age adults) qualify for, regardless of their income or employment status.What are examples of grants? ›
A grant is a gift to an individual or company that does not need to be paid back. Research money, education loans, and stock options are some examples of grants.What are the 3 types of grants that can be given to states? ›
The three general types of federal grants to state and local governments are categorical grants, block grants, and general revenue sharing (see Table 1). Categorical grants can be used only for a specifically aided program and usually are limited to narrowly defined activities.Do you have to pay back grants? ›
Grants and scholarships are the most sought after options because they are considered “free” financial aid”, meaning you don't have to pay it back as long as you meet all of the conditions. Once you take full advantage of grants and scholarships, you will have take out fewer loans to cover your education.