There are many different ways to raise capital for a new startup or small business. As you explore your financing options, don’t forget that there are programs out there that offer grants to entrepreneurs. Tracking down small business grants might take time and effort, but it could be worth it, particularly if you don’t want to take on too much debt. Read on for the inside scoop on how you can get your hands on a small business grant.
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What You Should Know About Grants
Unlike business or personal loans, grants don’t have to be paid back. But this isn’t exactly free money. Depending on the program you’re interested in applying for, you’ll have to meet certain requirements in order to qualify.
In many cases, small business owners have to raise a certain amount of money before an organization agrees to match what they’ve raised in the form of a grant. Sometimes entrepreneurs can’t get access to grants unless they can prove that they have funding coming from another source. That’s often an issue when business owners apply for grants through local and state-sponsored programs.
Before you accept any kind of funding, it’s best to read over the rules carefully. That way you know exactly what you’re getting yourself into. And keep in mind that you’re not off the hook once you receive your grant. You’ll have to formally report that the funds you obtained were used for their intended purposes.
The Small Business Administration is a federal agency that provides small business owners with advice, tools and resources. While it backs different kinds of business loans provided by various lenders and banks, the SBA does not offer any grants to individuals looking to launch or grow their businesses. Sometimes, Congress does pass bills that allow the SBA to give grants to certain organizations (particularly if they’re related to education) and nonprofits.
There are government grants available, but unfortunately, most small business owners aren’t eligible for them. When a government agency does offer grants, they’re typically meant to fund specific types of research in the medical or scientific fields or back certain social causes. And generally, these grants only help out non-commercial organizations and institutions rather than for-profit businesses.
For example, the Small Business Innovation Research Program provides grants that support small businesses in the tech industry that are committed to coming up with innovative products. In 2015, the program gave out more than 5,000 awards.
Related Article: 15 Ways Startups Can Raise Capital
Other Small Business Grants
Government agencies aren’t the only groups that are selective about who they give grant money to. Some grant opportunities target women and minorities who might otherwise have a hard time getting business loans and other forms of financing. For example, Eileen Fisher is an online fashion retailer that has offered female entrepreneurs thousands of dollars each year for over a decade. Other grant programs are designed to provide funding for specific projects and initiatives such as protecting the environment or providing childcare services.
While you might have heard of business loans for veterans, you might not know that there are small business grants for retired service members. For instance, Street Shares is a funding community that awards a grant to a different veteran small business owner every month.
How to Find Small Business Grants
Even if you manage to find a small business grant that you’re eligible for, getting your hands on it will require a bit of work. You’ll likely have to go through an extensive application process and submit documents explaining how you run your business and manage your existing budget. And you might have to wait a while to receive the funding you need (that is, if another business doesn’t beat you to the punch).
Fortunately, there are tools that can make finding grants easier and less time-consuming. For example, a great place to start is the site, grants.gov. You’ll find small business grants provided by different agencies like the National Institutes of Health, the CDC and the FDA. To apply for one of the grants, you’ll have to either download and complete an application package or create an account online through the website’s online platform known as Workspace.
You might be able to find additional grant opportunities by checking with your local chamber of commerce and reaching out to colleges and small business development centers. To find grants provided by state programs, you can visit your state government’s website and look through its finance or economic development section. In addition, you can contact nonprofits and groups within your specific industry to find out whether they help aspiring small business owners.
Related Article: Personal Grants
The Bottom Line
If you need funding for your small business, you might be able to find a foundation, a nonprofit or a special program that’s willing to offer you a grant. But pouring your heart and soul into looking for grant money might not be a good idea. Since grants are few and far between, small business owners tend to take out loans and turn to personal connections for financial assistance.
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