Startup Business Grants 101: Meaning, Funding & Tips
Thousands of great ideas never come to fruition because business owners and founders of nonprofit organizations aren’t familiar with the startup business grant process. They simply don’t have the seed money to get a business or organization off the ground. In learning about the benefits of grants, startups often pursue them without having a good understanding of where to find the most appropriate start up business grants or how to submit an application that results in a much-anticipated approval. Grants for startup organizations exist, but they’re not plentiful or easy to get. Groups or individuals who know where to find startup business grants and how to apply for them effectively are more likely to have success with the process of submitting an attractive application.
What Is a Startup Business Grant?
Funding for startup nonprofits consists of a sum of money that groups offer to small companies and nonprofits to help them with their work.
Start up business grants aren’t like loans. Organizations don’t have to put up collateral or pay late fees or interest. In fact, organizations don’t have to pay back grants at all. Essentially, the money is free.
Most applicants for startup business grants seek funds for projects with specific parameters and measurable outcomes. Grant money usually comes with limitations on how organizations can use it. For example, a homeless shelter that applies for a grant to cover the cost of food items to feed the needy — and gets it but uses those funds to pay for staff to prepare and serve the needy — may be guilty of fraud. Organizations that fail to use funds for the purpose outlined in the grant may have to pay the funds back.
About Searching for Startup Grants
In searching for grants for startup organizations, it’s important to recognize that grants are hard to find, and if you do find some, they may only be offered to organizations that meet strict criteria.
The first thought that many people have is to start with a large listing or database of start up business grants. This approach is likely to yield a lot of frustration with little or no results. Grant listings are lengthy, which means they’re incredibly time-consuming to sort through. As grant organizations regularly discontinue their offerings or new ones become available, grant listings quickly become outdated. Links to websites may become outdated or changed.
Organizations usually direct their grants toward a specific industry, gender, location or minority. It’s difficult to locate grants where your business or organization fits all the criteria that the grant-maker is looking for.
Competition for Grants Is Fierce
Unfortunately, there are many more organizations seeking and applying for grants than there are companies offering grants, making the competition for grants highly competitive. The challenge is finding just the right grant that fits with your mission and submitting the best possible application for it.
How to Get a Business Grant for a Start Up
Start up grants for small businesses can be challenging to get, but getting one isn’t impossible when you put your best foot forth. To get the best results, check out all your options for funding for startup nonprofits, gather all the information you need, make sure your organization qualifies for the grant, and read the application carefully. Most of all, take your time and do your best job. Ask someone that’s familiar with startup business grants to review your application before you submit it.
First, check all levels of government for grants including federal, state, and local governments. Be aware that the federal government often distributes federal dollars through state governments, local governments, educational institutions, and agencies, and you may be able to access grants from these entities.
Once you’ve identified a potential startup business grant opportunity, take note of any documents or information the grant requires and start gathering everything you need before you get started. If you leave anything out, you could miss out on an important start up business grant.
Put the due date on your board calendar to be sure you submit it on time. On that note, give yourself plenty of time to get the startup business grant application in. It’s not uncommon for grant applications to take weeks to complete.
It’s typical for grant-makers to ask for financial data related to your nonprofit. Make sure the data is current and accurate. An accountant may be helpful in helping you understand what they’re looking for. It may also be worthwhile to consider hiring a grant writer to champion the process. The funds you receive from a grant could potentially cover the cost of hiring professional help.
If hiring a grant writer is out of financial reach, you might consider sending one or more of your board members to a workshop or seminar on grant writing as part of your board education program. Grant writing classes, workshops, and conferences are informative and may increase your chances of getting funding.
Bear in mind, if your organization doesn’t get approved for a startup business grant the first time around, you may be able to apply again later.
Where to Look for Grants
Grants won’t come looking for you at your doorstep, so plan on pursuing them actively. However, don’t modify your business to make it look like it fits the proper criteria, because this approach will likely end in a denial. For the best chance at success, apply for grants that look like they were tailor-made for your business or organization.
There are many resources and grants available that any type of organization can apply for, such as:
- Grants listed at gov
- Small Business Innovation Research and Small Business Technology Transfer Programs
- Economic Development Administration
- Small Business Development Centers by state
- FedEx Small Business Grant
- National Association for the Self-Employed
- USDA Rural Business Enterprise Grant Program
- Dare to Dream
These grants may not be available for startups, but they can help move your mission along once your organization is up and running. There are also grants for certain populations, such as minorities:
Certain other organizations open up their grant opportunities for women. These include:
- Innovator Challenge
- Amber Grant
- Eileen Fisher Women-Owned Business Grant
- The Huggies Mom-Inspired Grant Program
Women may also have good experience finding grants at SBS Women’s Business Centers.
How to Increase Your Chances of Securing a Startup Business Grant
Difficult as it may be, there are things that you can do to help put your organization at the top of the list for a startup business grant. Rule number one is: Don’t get discouraged. Expect the process to take time, effort, and much research.
The first thing you need to decide is how you’ll approach the grant-maker. Do you plan to send an email? Is it better to pick up the phone and call them? Are you able to get an appointment for an initial office visit? Perhaps the best approach is to send a general letter of inquiry.
The grant-making company’s initial response will help to determine their level of interest in your project or organization. If you’re successful in piquing their interest, they may ask to see something more.
Bear in mind that grant-makers are looking for strong applications. State your objectives clearly, set forth your plan and provide them with a realistic budget. State measurable objectives for the short and long term, as well as your methodology, benchmarks, and timetables.
Some organizations offer workshops for potential grant applicants where they explain more about what they’re looking for. Applicants must adhere to strict guidelines and give the funder no more or less information than what they asked for. Make sure you fill in all the blanks and check all the boxes so the grant-maker doesn’t send it back unfunded.
Be clear about how your organization intends to use the funds, and if you get the grant, be sure to only use the funds for the purpose outlined in the grant.
Other Ways to Finance Your Business or Organization
While grants are one of the most attractive funding sources because organizations don’t have to pay them back, the difficulty in obtaining them means that most businesses and organizations will need to resort to other sources of funding. Here are some more viable options for funding for startup nonprofits:
- Bank loan
- Credit card
- Pledge some of future earnings
- Attract an angel investor
- SBA loan
- Family and friends
BoardEffect’s board management system is the perfect platform where boards or committees can work on applications for start up business grants. It offers features like unlimited cloud storage, internal secure messaging, and granular permissions to assist your efforts in grant-seeking. With a shared board calendar, your board will always be in the loop of the status of your grant applications.