Need funding? Government grants for small business might be an option.
When you need funding for your company, government grants for small business sound like a dream come true. They deliver funding that doesn’t have to be paid back (although you do need to comply with all the terms and conditions of the grant) and can help you cover costs as you grow.
But there’s some misinformation out there regarding small business grants, and many businesses won’t actually qualify.
Let’s look at how government grants for small business work and if you can get one for your company.
Qualifying for government grants
While each grant will have its own eligibility requirements, most government grants are for nonprofits. If you have a for-profit business, there might still be grants available, especially if you have a tech business that focuses on research and development.
For your business to qualify for a grant, it must first meet the small business size standard established by the Small Business Administration (SBA). Size standards vary by industry and are based on either the monetary value of your business or your number of employees, depending on your industry. Even if your business qualifies for a grant, however, you can’t use the money any way you want.
The government usually doesn’t allow businesses to put grant money toward day-to-day expenses, launching a business or paying debt.
Finding government grants for small business through Grants.gov
The most extensive online resource for government grants is Grants.gov, which has a tool to check eligibility and a search function. You could spend all day sorting through grants that don’t fit your business, but here’s how you can find the ones that do:
- From the home page, click Search Grants.
- Under Eligibility, check the type of business you have. If you’re a small business owner, this will likely be Small businesses.
- Under Funding Instrument Type, check Grant, unless you’re open to other types of funding.
- Under Category, check the category that applies to your business.
Depending on your business category, you’ll end up with anywhere from zero to hundreds of grant results. If there are quite a few results listed, you can perform a keyword search to narrow them down.
As you browse grants, you’ll notice an “Opportunity Status” field. By default, the search tool checks “Forecasted” and “Posted.” Forecasted grants are upcoming and not official yet, whereas posted grants are current and open for applications. The remaining categories are “Closed” and “Archived,” which you should leave unchecked.
You can apply for grants and track the status of your application through Grants.gov, but you will need to register for an account first.
Additional government grant resources
While Grants.gov is the best place to look for government grants, there are other options to consider. Every state has at least one economic development agency, although some states have different names for theirs. Your state’s agency could assist you with locating local and state government grants.
BusinessUSA has a questionnaire regarding business information that you can also complete to find financing options, which include grants. The drawback to this is that it might include business loans in your results, giving you more to look through.
Additionally, the Small Business Innovation Research and Small Business Technology Transfer (SBIR-SBTT) offers grants for small businesses in the technology and science industries. To view grants from the site’s homepage, pull up the drop-down menu under “Funding,” and then click “Open” under “Solicitation Listing.”
Other ways to fund your business
Government grants are great if you can get them, but most small businesses don’t qualify. Two alternatives are a business loan and a company credit card.
With a business loan, you can borrow a lump sum and pay it back over the course of several years at a low interest rate, provided you have a good credit score. Each lender has its own minimum requirements, but standard requirements include:
- Time in business of at least two years
- More than $50,000 in annual revenue
Some online lenders have lower minimum requirements for business loans, albeit with higher interest rates.
You’ll have the easiest time getting approved for a business credit card, which you should have anyway since it can deliver several benefits above just being a financing option. Interest rates tend to be higher than with business loans, but there are zero-percent APR business credit cards available.
The zero-percent APR lasts for an introductory period, usually 12 months, so you’ll need to pay off your balance within that time to avoid interest charges.
Since you don’t need to pay back grants, look for those first if you think your business fits the bill. If you don’t find anything, loans and credit cards are viable ways to finance your business (you could even try crowdfunding).
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