Government Grants for Small Business Startups: Finding and Applying for Them
Government grants for small business startups are plentiful if you know where to look for them. Federal, state, and local governments offer many grants for various types of businesses to help boost the economy.
Grants provide valuable opportunities to kickstart your business, fund new initiatives, or weather challenging times.
Despite what you may have heard, government grants are competitive, but they’re not necessarily out of reach. Each grant has a specific set of criteria for applicants, and it’s easier to get through the process when you know how to apply for them.
We’ll go through what a business government grant for startups is, how it differs from a business loan, and give you some good information about finding and applying for a government business grant.
What Is a Government Business Grant?
A government business grant is a sum of money that a government entity pays to businesses, and the great thing about them is businesses don’t have to pay it back.
You can expect grants to be highly competitive because savvy business owners know that grants provide a free source of money that’s relatively obligation-free. While you won’t have to pay a grant back, governments may limit the types of things you can spend your grant money on.
An alternative to a business grant is a business loan. Business loans differ in that business owners have to pay them back, and they’re not as competitive as grants.
Government Grants for Small Business Startups: Types of Grants
To increase your chances of getting a government grant, be sure to look for grants at every level of government. Your business may qualify for a grant based on the type of industry, a crisis, or economic situation, or it could even be based on the characteristics of the business owner.
If your business is in the science, technology, or health field, the federal government is a good place to begin looking for grants. The federal government is specifically interested in businesses that work in research and development in the areas of science, climate, and the environment.
Also, as we’ve seen recently during the pandemic, the federal government offers stimulus grant programs when the economy calls for them.
Two notable federal grant programs are the Small Business Innovation Research grant program (SBIR) and the Small Business Technology Transfer Program (STTR).
Twelve federal agencies offer SBIR and STTR grants including:
- National Science Foundation
- National Institutes of Health
- Department of Energy
- Department of Defense
- National Institute of Food and Agriculture
- National Institute of Standards and Technology
- Environmental Protection Agency
- Department of Transportation
- Department of Homeland Security
- Department of Education
- National Center for Education Research
SBIR offers grants to small businesses that engage in research and development and also have commercial potential. The goal of these grants is to stimulate technological innovation and encourage scientific entrepreneurship.
Each federal agency creates its own topics and eligibility criteria. Each has a team that reviews applications and awards grants. Grants generally range between $25,000 and $250,000, but if your business has lots of potential, it could receive an award of $1 million or more.
One of the requirements of the STTR program is the business must be collaborating with a research institution. The grant awards for the STTR program are similar to the SBIR program.
Look for state grants on your state’s department of commerce website or grants portal. State grants tend to be a bit less competitive than federal grants. Some state grants work in tandem with federal grants. For that reason, the state grant awards are usually lower than federal grants. Many of the state grants are matching grants which means that companies match the money they get from the state.
If you’re not having luck with federal or state grants, you might have success at the local level. It’s common for local communities to offer their own small business grant programs. The awards aren’t as high as federal or state grants, but you’ll find the competition isn’t as robust. Local grants are a good bet if your business makes a significant impact on your community.
Some grants are geared toward various demographics of people rather than specific industries. For example, the type of business owner you are may also play a role in qualifying for a government business grant. You may qualify for certain grants at any level of government if you are a business owner that fits one of these descriptions:
The Small Business Association (SBA) and Local Initiatives Support Corporation (LISC) are good resources to help you find government grants.
Once you’ve identified which grants your business qualifies for, set aside some time to read over the guidelines and get started on your application.
How to Apply for a Grant
Each grant you apply for will have its own guidelines, requirements, and application. Be sure to read through everything carefully.
To ease the process, we’ve got 5 tips to help you get started:
- Research the grant and the entity that’s offering it. Be sure it’s legitimate and be wary of scams.
- Be sure your business qualifies for the grant. Read through the qualifications diligently and ensure that your business meets every one of them. Grant applications are usually time-consuming, and you won’t want to waste time on a grant you don’t qualify for.
- Review your business plan. Update it if necessary. Most grantors will ask for a copy of your business plan.
- Watch the deadline. Many grants only have a small window of time to get your application in. Also, take note of the appropriate channel for submitting it so you can be sure it gets into the right hands.
- Follow up on your submission. It won’t hurt to contact the grantor to be sure they received your application. Most grantors state when they’ll be announcing the winner. If they don’t, it’s something you can ask when you follow up.
Whether you’re pursuing a government grant or a corporate grant, your BoardEffect board management system offers your board a secure platform for working on government grants for small business startups. The grant process can be lengthy and there’s a lot to keep track of, and you’ll have a greater chance of success by using a board management system that helps you keep everything organized and on track.