Small business grants provide financial aid without the burden of repayment, but obtaining them may be competitive. Federal and state agencies, corporations and industry-specific organizations may offer grant funding.
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By Nathan Paulus
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Director of Content Marketing, MoneyGeek
Nathan Paulus is the Head of Content Marketing at MoneyGeek, with nearly 10 years of experience researching and creating content related to personal finance and financial literacy. Paulus has a bachelor's degree in English from the University of St. Thomas, Houston. He enjoys helping people from all walks of life build stronger financial foundations.
Edited by Rae Osborn
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Dr. Rae Osborn is a MoneyGeek content editor with over seven years of editing experience and over 20 years of experience in publishing and writing science content. She also works as a science researcher, writer and editor and a professional reviewer for Science Reviews and Advances in Entomology.
MoneyGeek is dedicated to providing trustworthy information to help you make informed financial decisions. Each article is edited, fact-checked and reviewed by industry professionals to ensure quality and accuracy.
Updated: August 5, 2024
NP
By Nathan Paulus
NP
Director of Content Marketing, MoneyGeek
Nathan Paulus is the Head of Content Marketing at MoneyGeek, with nearly 10 years of experience researching and creating content related to personal finance and financial literacy. Paulus has a bachelor's degree in English from the University of St. Thomas, Houston. He enjoys helping people from all walks of life build stronger financial foundations.
Edited by Rae Osborn
RO
Dr. Rae Osborn is a MoneyGeek content editor with over seven years of editing experience and over 20 years of experience in publishing and writing science content. She also works as a science researcher, writer and editor and a professional reviewer for Science Reviews and Advances in Entomology.
MoneyGeek is dedicated to providing trustworthy information to help you make informed financial decisions. Each article is edited, fact-checked and reviewed by industry professionals to ensure quality and accuracy.
Updated: August 5, 2024
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Starting a small business is rewarding, yet securing initial funding is a common hurdle. Grants provide financial support without the obligation of repayment, but the allure of 'free money' typically results in stiff competition. As an entrepreneur, understanding the various types of grants, their advantages and limitations and the application process will help you secure grants that align with your business needs and increase your chances of acceptance.
Small Business Grants Key Takeaways
Understanding the landscape of small business grants helps entrepreneurs looking to finance their ventures effectively.
Grants provide non-repayable financial aid to foster business growth, innovation, or project development.
A broad range of grants are available, including federal and state grants, industry-specific funds and those aimed at particular demographics, such as women or veterans.
In contrast to loans, grants are "free money" with no repayment obligation, whereas loans accrue interest and require repayment.
Entrepreneurs should regularly visit federal and state government websites to find grants, connect with industry organizations and nonprofits and look into corporate programs. Keep in mind that grants are often time-sensitive.
Small business grants are funds designed to support ventures that may not appeal to conventional lenders yet offer significant community value. These grants, sourced from government entities, private corporations and philanthropic organizations, are unique because they do not require repayment. The amount awarded can vary significantly, with some grants as modest as a few hundred dollars and others providing substantial support well over $10,000.
Grants may seem the ideal choice due to their non-repayable nature, but they come with their own challenges and stipulations. On the other hand, while requiring repayment, business loans can offer more flexibility and may be more accessible.
Business Grants Business LoansIt must be repaid with interest.
Governments, corporations, philanthropists.
Banks, specific lenders and institutions like the SBA.
Can be rigorous with stiff competition.
Based on creditworthiness and business financials.
Often targeted with specific spending stipulations.
More flexible, though some loans may have stipulations.
Generally considered as taxable income.
Not considered income; interest paid can be tax-deductible.
Impact on Credit
Doesn't help in building business credit.
Can help build business credit if repayments are made consistently.
Consequences of Mismanagement
Larger grants may have reporting requirements.
Can lead to repossessed assets, damaged credit score, or bankruptcy depending on the loan agreement.
The U.S. Small Business Administration (SBA) is a primary source for federal small business grants, providing various funding opportunities. These include grants and loans available through its Small Business Development Centers, many targeting businesses that focus on research and rural economic development. Numerous other federal and state agencies also offer specialized grant programs for small businesses.
The SBIR program is a competitive grant initiative targeting small businesses engaged in research and development. Its goal is to stimulate scientific and technological innovation. The program is structured into three phases, each designed to serve distinct objectives and advance participants to the next stage of development.
R&D entrepreneurs aiming for technological advancements.
Submit your application to agency solicitations. Only small businesses in the United States that qualify as a Small Business Concern (SBC) can receive the grant. Visit their website for further information.
Like the SBIR, the STTR program emphasizes collaboration between research institutions and small businesses. A key feature of the STTR program is its requirement for the small business awardee and its associated institution to formulate an intellectual property agreement.
Technology-focused businesses aiming to collaborate on innovative projects.
Submit your application to agency solicitations. Only small businesses in the United States that qualify as a Small Business Concern (SBC) can receive the grant. Visit their website for further information.
Administered by the U.S. Department of Agriculture, the Rural Business Development Grant program aims to bolster small businesses in rural communities. It focuses on stimulating job creation and economic development and providing financial assistance to businesses that are pivotal in rural growth.
The USDA provides two grant types: Opportunity and Enterprise. Opportunity grants are limited to up to 10 percent of the total annual grant funding. Enterprise grants are for projects that benefit small and emerging businesses in rural areas, as specified in the application. To learn more about how these grants can be used, visit their website.
Rural public entities, including towns, communities and state agencies.
Varies based on the specific grant type and project.
Ensure your business has fewer than 50 employees, under $1 million in gross revenue and is located in a qualifying rural area. Applications can be submitted through the local or state USDA Rural Development offices and are accepted once per year.
The PRIME program offers federal grants to microenterprise development organizations. These organizations also assist disadvantaged microentrepreneurs.
Small businesses looking to expand their operations internationally, especially those involved in exporting.
Varies based on the specific grant and business needs.
Businesses interested in the STEP grant should contact the SBA’s Office of International Trade to determine eligibility and application procedures.
The STEP program supports small businesses aiming to expand their reach into international markets. This program grants businesses involved in exporting, assisting them in participating in foreign-market trade shows and other global expansion opportunities.
Small businesses looking to expand their operations internationally, especially those involved in exporting.
Varies based on the specific grant and business needs.
Businesses interested in the STEP grant should contact the SBA’s Office of International Trade to determine eligibility and application procedures.
The EPA Grants provide grants for small businesses striving to enhance the environment. These grants support innovative solutions and initiatives that address concerns such as air and water quality, pollution prevention and overall environmental quality.
Small businesses focused on environmental improvements and innovations.
Varies based on the specific grant and project.
Explore the EPA's official website or attend their grants webinars for further information.
The EDA provides various programs, funding opportunities and grant competitions. Note that the EDA doesn't provide direct grants; you can review their funding options and apply accordingly.
Small businesses and startups aiming to contribute to community infrastructure and regional economic growth.
Varies based on programs.
Regularly monitor the EDA's official website for new grant announcements and competitions.
The NIFA provides grants to support small businesses within the agriculture and food sectors through three primary funding mechanisms: competitive, capacity and non-competitive. Competitive grant programs utilize a peer review process to select the best proposals from various institutions. Capacity grant programs help maintain research and extension capabilities within the Land-Grant University System. Non-competitive grant programs, mandated by Congress, support designated institutions in research, education or extension activities vital to state or regional needs.
Small agriculture and food industry businesses.
Varies, with multiple grants offered throughout the year.
Regularly check the NIFA's official website for detailed application guidelines and grant announcements.
Corporations and large companies often offer small-business grants as part of their philanthropic efforts. Some of these grants cater exclusively to nonprofits servicing industries. A significant number are also available to for-profit companies as well. While the application process might be more competitive, the potential rewards make it a valuable avenue for businesses seeking financial support.
Grant Amount EligibilitySmall businesses with an Amazon Business account.
Range from $15,000 to $25,000, a one-year Business Prime membership and free eero Wifi and Kindle Scribe products.
Small businesses that have been in operation for at least one year.
The main award offers a grant of $25,000, with other category-specific prizes available.
For-profit small businesses.
Range from $15,000 to $50,000, with additional FedEx print credits for grand prize winners.
For-profit small businesses.
Range from $5,000 to $25,000.
Small businesses seeking financial aid and technological support.
Three distinct awards: Platinum, Gold and Silver, each offering different benefits. Visit their website to learn more about the detailed benefits.
Hold a NASE membership.
Small businesses with a Venmo account.
$10,000, along with promotional opportunities on Venmo's platforms and mentorship sessions.
Small business owners looking to enhance their digital knowledge and seeking financial support.
$10,000, with a total grant pool of $500,000 for 2023.
Tech-forward startups from five global regions creatively incorporate Visa's products.
The grand prize is $50,000, with additional awards for runners-up, audience favorites and regional/local winners.
Offer products with innovative payment solutions.
Grant programs typically operate on annual cycles, announcing recipients well after applications are submitted. Given the fierce competition and precise eligibility criteria, it's helpful to understand the distinct requirements of each grant thoroughly. Using the steps below, you can start crafting a strategic application that effectively highlights the value and potential of your business.
Many grants have specific application windows. Mark these dates and set reminders to ensure you start the application process well in advance. Set up alerts or regularly check grant websites to ensure you take advantage of new opportunities. Prepare a detailed business plan outlining how the grant funds will benefit your business.
Review businesses that previously secured grants to gauge your chances. Avoid using a one-size-fits-all approach. For each grant, customize your application to address each grant's specific requirements and objectives.
Have all necessary documents ready. This includes your EIN, DUNS number and revenue history. Also, double-check that you meet all the grant's eligibility criteria. This ensures your efforts are directed at viable opportunities.
Local business organizations can guide you on grant applications. For substantial grants, consider hiring a professional grant writer. Their expertise can help articulate your vision and increase your chances of success.
Focus on your business's innovative aspects and growth potential in your application. Highlight emerging technologies and how your business aligns with the grantor's mission.
Specialty small-business grants cater to distinct segments of the entrepreneurial landscape, ensuring that specific groups receive the support they need. These grants recognize their targeted demographics' unique challenges and offer tailored financial assistance. You can access resources that align closely with your needs by tapping into these specialized funds.
Entrepreneurs from racial and ethnic minority groups often face challenges in securing funding. Grants tailored for them aim to bridge this gap, offering recognition and financial support.
