Government Grants for Small Businesses (2023) - Chamber of Commerce (2023)

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.

How can I get a governmentsmall businessgrant?

These are the steps for getting asmall businessgrant:

1. Assess the grant-giving entity
2. Identify the problem you are attempting to solve
3. Write and submit a grant proposal.
4. 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.

Follow up

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.

Grants.gov

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.

SmallBusinessDevelopmentCenter (SBDC)

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.

Bottom line

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.