For many entrepreneurs, finding an available grant for their small business might feel like trying to find and capture a unicorn. That’s because while there are grants available for small businesses, in reality, they are only available to very specific types of businesses. Nevertheless, figuring out how to get a small business grant is an appealing endeavor to many business owners — particularly for early-stage businesses that are unable to qualify for financing. With that said, there really aren’t many grants available for starting or growing the average small business.
However, there are grants available for some women-owned businesses, minority-owned businesses and certain industries, such as those with medical and tech-related businesses. But, unfortunately, sometimes the criteria can be even more specific than that.
Looking for how to get a small business grant (or that elusive unicorn)?
Available grants come from a variety of sources (including government grants) that could be a fit for your business. You might want to search for specific grants within your industry — for example, transportation or environmental. Grants are also sometimes available to encourage new technology development. Start by looking at your state’s economic development agency to see if they offer any grants that could be a fit for your business.
If none of the government grants apply to you, there are also some available from private sources. These grants come from nonprofit organizations, private individuals and for-profit companies, and typically award funds to companies engaged in the causes they support.
These private funders use grants to encourage action, such as community development, establishing environmentally friendly businesses and creating jobs in specific industries.
Some cities and communities also offer grants, or very low- or no-interest loans, to encourage Main Street business growth and revitalize declining districts. For example, some community grants may be provided to improve the appearance of businesses or the structural integrity of older buildings in the area.
Completing a grant application
There is no one-size-fits-all application process. They vary widely depending upon the grant and who offers it. Be prepared to provide details about your business, personal information and why you are applying for funds. You will likely also need to demonstrate that you fit into the category of business the grant is designed to help.
For example, to win a grant for a minority-owned business, you may need to provide proof of social or economic disadvantage and a statement of personal history. Grants coming from private sources may seem even more idiosyncratic; be prepared to answer a lot of questions about you and your business when applying.
There is nothing easy about completing an application for a grant, so if you’re looking for what’s sometimes billed as easy money, you will need to rethink your approach.
Applying for a grant can be as challenging (in some ways maybe even more so) as applying for a loan, and can take several months to process. It’s neither easy, nor quick.
As a result, some businesses hire professionals who specialize in completing grant applications to improve the odds of winning one. This could be an option for your business if you are in one of the industries or classes supported by grants.
Once you’ve won the grant
Now that you know how to get a small business grant, what do you do after you collect the funds? Although the application can be challenging and time-consuming, one of the benefits of winning a grant is that it does not need to be repaid. However, you may be required to provide data, research findings or other information identifying how you used the grant money and the subsequent results or impact to your objectives. While you might not be required to make any payments, you will be paying for the grant in the time and energy needed to capture and report information back to the organization that provided it.
Additionally, depending on the grant, there could be stipulations for how its proceeds are used. They could be as simple as requirements for where you do business or that you complete some kind of training or orientation before you can access the funds. These requirements can be fairly stringent, depending upon the nature of the grant, the industry you’re in and the entity offering the award.
Before you apply for any funding, make sure you understand all the requirements and are willing to comply.
Just remember, although the thought of “free money” sounds great, the grant process is challenging and could take several months to complete. If your business is in an industry that is eligible for a grant, or your mission is supported by a group offering funding, a grant may be a source of capital for your business. You’ll need to do your homework to make sure your business qualifies and have the patience to wade through the application process, but depending on your situation, it could be worth it.