Grants are one of the best ways for people to get funds. Think of it as free money but rather than you buying a car with it, the money is used for some sort of project or funding a business.
What is a Grant?
A grant is a sum of money that does not have to be paid back. They are usually distributed by governments, corporations, foundations or trusts. These financing options help a business grow and build their organization.
Grants should not be relied upon as a necessity, but only seen as additional capital. Applying for grants can be a long and involved process. Fortunately, there are resources to provide everything you need to know about getting small business grants.
Challenges of Getting a Small Business Grant
Searching through numerous websites looking for startup business loans or grants can be an overwhelming task. Small businesses can have a more difficult time receiving awards because they are usually connected directly to government agencies with specific interests.
Eligibility requirements vary from grant to grant, depending on the source. A good credit score will be beneficial as businesses with low scores will find the process much more challenging. The small business that supports social needs, national goals, or the economy will have easier access to grants.
State-level grants are often connected to economic or social needs, and the majority are matching grants. That means that businesses must be able to match the amount that has been loaned. Local communities can offer less competitive grants, but the amounts will be much lower than state or federal grants.
Types of Small Business Grants
There are three kinds of grants for small businesses. Grants and startup business loans are listed online with links to the main pages where eligibility requirements and applications are found.
1. Federal Business Grants
Non-profits and educational institutions are usually granted federal business grants. Some local governments make grants available through economic redevelopment departments. The U.S. Small Business Administration (SBA) helps small business owners by providing resources for grants and loans for small businesses across the country.
2. State and Local Grants
These are focused on funding small businesses that grow and support social and economic needs. The amounts are lower, but so is the competition. Many of them are matching grants, meaning that your business will put in the same amount of funds towards the purpose of the grant.
3. Grants for Small Business
Grants from corporations are another option for small businesses. Large corporations look for ways to give back and, along the way, get terrific PR for their own brand. These grants are usually small, have specific eligibility requirements, and are often awarded through competition.
How to Apply for a Small Business Grant?
Before you attempt to apply for the best startup business loans or a small business grant, take some preliminary steps for best results. The process to get a business grant is time-consuming, so completing these steps will simplify the process.
- Needs Statement: describes why you need funding. Explain what the grant would achieve for your business, as well as why the grant contributor should be interested in helping your business. If the project is compelling, that will increase the chances of receiving funding.
- Make a Business Plan: A business plan will outline your mission statement, describe the products or services offered, the market research, marketing strategies, name your team, and your financial plan and growth projections. Business plans show that you have a goal and have clearly planned out how to reach that goal.
- Administrative Details: Have available in a document contact information for the business owner, what the grant money is going to be used for, business tax ID (EIN) number, business license number as well as revenue vs. profit history and projections. Gather business records as well, ideally from the previous three years.
Additional things to do that can help your application:
- Hire a grant writer who specializes in applying for the type of grants you are interested in.
- Look for paperwork that shows tax-exemption status if your business is eligible. It can sometimes increase your chances of receiving funding.
- If applying for nonprofit grants, make sure you have achieved nonprofit 501(c)(3) status because it shows that your business is a legitimate nonprofit.
- Determine the type of grants you need to benefit your business. Read carefully through the grant requirements and make a list of grants. Before you start writing a proposal, consider scheduling a meeting with the funder to get more information about them and show that you have an interest.
In Conclusion
While at first glance, a grant can look like easy, free money, the overwhelming process will make you work for it. If you put in the time and energy to apply for a small business grant, it can pay off for your business. Your hard work will be rewarded when you receive the Notice of Award!