What is a small business grant?
A small business grant is essentially free money given to entrepreneurs or small business owners to help them start a business or expand their organization. Unlike loans, you don’t have to pay grants back. However, they often come with restrictions on how you can spend the money.
Grants may be free money but they’re not easy to secure. Applying for a grant takes time and preparation. They’re also highly competitive, so small businesses should only apply for grants for which they’re eligible.
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Small businesses can seek various grants, including private grants from corporations and grants from federal, state and local governments. Grants are also available for specific industries and demographics. For example, minority business owners can seek specific minority-owned business grants.
Business grants vs. business loans
Grants and loans are both ways to fund your business. Here’s how they compare:
Grants: Grants are desirable because you don’t have to repay them. However, not everyone will be eligible for grants. For example, if you’re just starting out in business (two years or fewer), it’s unlikely you’ll be awarded a grant. Additionally, the grant application and proposal process often has strict requirements. If you don’t meet specific requirements, the agency will reject your request.
Loans: If grants aren’t an option, you may choose a small business loan to fund your company. Loans are also an easier funding option if you must bankroll your business while in personal debt. The best business loans will help you secure enough capital to meet your needs. In contrast, grant amounts are fixed and may not be sufficient. Additionally, some lenders may have more relaxed requirements, such as a lower minimum monthly income or lower minimum time in business.
Where can you find government grants for small businesses?
Government grants are a desirable source of funding for many small businesses. You can find government grants via the following resources:
SBA.gov:SBA.gov is one of the top places to search for grants. The government site is filled with various grant and financing opportunities. The Small Business Administration (SBA) also offers SBA loans that differ from conventional loans in crucial ways.
Grants.gov:Grants.gov is the ultimate database for federal grants. You can search for grants by funding type, eligibility, category ― arts, business and commerce and health ― and agency. Be forewarned: Sorting through the database will require some effort. However, the potential payoff is finding a grant opportunity perfect for your company.
United States Economic Development Administration (EDA): The EDA administers grants for economically depressed communities to stimulate new jobs and commercial growth.
Small Business Development Centers: The SBA’s Small Business Development Centers offer local resources to help your business.
Challenge.gov: Challenge.gov hosts challenges and prize competitions designed to fund organizations with innovative solutions to pressing issues.
These aren’t the only government grant resources. Businesses should explore every governmental tier ― federal, state and local ― to find the best grants.
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