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Finance your business with small business grants

Business credit

Finance your business with small business grants

Finance your business with small business grants

Both newer and more established businesses occasionally need extra capital to build or grow their operations. When it comes to researching your business’ financing options, don’t overlook small business grants.

Governments, organizations, and corporations periodically award grants for small business owners who meet specific qualifications. Depending on your goals, a small business grant could either give you the financial freedom to take on new projects or help you achieve more day-to-day stability.

What’s the difference between small business grants and loans?

The appeal of grants for small businesses is that it’s free money. Unlike a loan, you don’t have to repay the funds you receive.

Not many organizations can afford to dole out free money regularly, though, so there aren’t as many opportunities to apply for business grants as there are to apply for loans. As a result, not only is the competition for grants steep, but the application processes tend to be more rigorous. Depending on which organization is offering the grant, you may have to submit a detailed business plan or essay, make a promotional video, or complete a sample project.

Many grants for small businesses are hyper-specific, too, requiring recipients to use the money for particular projects, whereas loans tend to be more flexible. Depending on the loan you apply for, you can put the funds toward any number of different activities, like relocating, hiring, financing equipment, or purchasing inventory.

Though small business grants may take more effort to apply for, the potential payoff is huge. To increase your chances of getting selected, look for grants relevant to your niche or personal background.

Below is a breakdown of the most common types of small business grants:

State and federal business grants

Government agencies give small business grants at both the federal and state levels. These grants are often geared toward companies in the healthcare, science, tech, childcare, or environmental industries. While state grants for small businesses typically have less competition than federal grants, they may also have more specific requirements for how recipients use the money. Here are a few of the best federal and state small business grants to consider:

  1. Small Business Innovation Research Program: The SBIR program awards grants to small businesses doing scientific or technological research or development work with commercial potential. Depending on which grant you qualify for, you could receive anywhere from $150,000 to $1 million.
  2. Small Business Technology Transfer Program: Like the SBIR program, STTR gives business grants of up to $1 million to businesses engaging in technological innovation research and development. The caveat is that recipients need to collaborate with a research institution after receiving the funds. The participating government agencies include the Department of Defense, the Department of Energy, the Department of Health and Human Services, National Aeronautics and Space Administration, and the National Science Foundation.
  3. National Institute of Food and Agriculture: Part of the U.S. Department of Agriculture, NIFA offers grants for small businesses throughout the year to non-profit organizations and larger businesses doing work in food and agricultural sciences. Funding for their various grant programs is usually in the range of a few million dollars.
  4. Economic Development Administration: The EDA, a bureau within the U.S. Department of Commerce, offers grants to small businesses supporting local economic development, particularly in distressed communities. Use the EDA website to search for your state’s agencies and resources.
  5. USA.gov State and Territory Business Resources: This website is a good resource to search for state business grants and funding opportunities.

Local small business grants

City governments and regional organizations typically issue grants to help start a business, support local small business growth or assist with community-building projects. Local small business grants tend to be much smaller than their federal and state counterparts, but there’s also less competition, so you may have a greater chance of getting accepted.

To search for local grants for a small business startup or other growth stage, visit your city’s official website, attend a city hall meeting, or call the county clerk’s office to inquire about funding opportunities for local businesses. Another helpful resource is the Small Business Administration’s (SBA) Small Business Development Centers.

Enter your zip code on the SBA website to search for your local SBDC. Usually associated with local universities, these centers are designed to provide support to small business owners looking for help with financing, networking, or mentoring.

Corporate grants for small businesses

Corporations sometimes give grants to a small business as part of a philanthropy initiative or PR campaign. Many of these grants are contest-based, so applicants are required to submit an idea, project, or pitch for judgment. These contests are usually widely publicized, which means there’s a lot of competition, but there are also more opportunities to win second and third-place prizes. Here are some great corporate grants for small businesses to look into:

  1. National Association for the Self-Employed: NASE gives grants for small business owners of up to $4,000 to help grow their operations. Recipients can use the money to hire staff, create marketing materials, buy equipment, and more, but they must be a member of NASE to apply.
  2. FedEx Small Business Grant Contest: Every year FedEx holds a contest to award 10 different small businesses with varying amounts of money. The first place winner receives $50,000, the second place winner receives $30,000, and the eight third place winners receive $15,000 each. Every winner gets additional money toward FedEx print and business services, too.
  3. Nav’s Small Business Grant: Each year, Nav gives a couple grants for small business owners to take their operations to the next level. The grand prize winner receives $10,000, the first runner-up receives $2,000, and the second runner-up receives $1,000. To apply, business owners need to sign up for a free Nav account and post on social media explaining their business’ primary challenge, while also showcasing their brand personality.
  4. Visa Everywhere Initiative: Launched in 2015, Visa’s annual global contest awards grants for small business startups developing innovative solutions to modern payment problems. The top three winners receive $25,000 and the overall winner gets an additional $25,000. To apply, you need to be a startup that has at least some funding, a product in market, and an idea that aligns with Visa’s mission.

Grants for women small business owners

Many government agencies and organizations give grants to women business owners to support female entrepreneurship and help promote equity in the workplace.

  1. Eileen Fisher Women-Owned Business Grant: Launched in 2004, the Eileen Fisher Program gives small business grants to innovative women-owned companies past the startup stage. The organization took a hiatus in 2018, but plans to return in spring 2019. Check their page for updates on how to apply.
  2. Amber Grant: WomensNet program gives monthly small business grants of $2,000 to women business owners from a variety of different fields and backgrounds. Each monthly winner is eligible for the annual $25,000 grant, which is awarded at the end of the year. Applying is easy — you just have to answer a few questions and “speak from the heart,” the site says.
  3. Cartier Women’s Initiative: Cartier holds a yearly competition to give funding to women entrepreneurs in the initial stages of business development. Cartier chooses seven finalists, one from each region including North America, Latin America, Europe, Sub-Saharan Africa, the Middle East and North Africa, East Asia, and South Asia and Oceania. The top finalists receive a $100,000 grant to start a business or help it grow, and the two runners-up from each region receive $30,000.
  4. The Tory Burch Foundation Fellows Program: Tory Burch chooses 50 women entrepreneurs each year to participate in their fellow program. The program gives each fellow a $5,000 small business grant to help grow their business, as well as a one-year membership to an online peer-to-peer network of women entrepreneurs.
  5. Women Founders Network Annual Fast Pitch Competition: The Women Founders Network holds an annual pitch competition for women entrepreneurs looking to sharpen their business strategy and better appeal to angel investors. The competition gives $45,000 in cash prizes to the top three finalists, $5,000 to the recipient of the Junior Judges Award, and one-on-one coaching and mentorship to each winner.

Grants for minority small business owners

Some government agencies and organizations offer grants to minority business owners as a way to support historically oppressed sectors of the population and promote diversity in the economy.

To search for small business grants, start by checking the Minority Business Development Agency. Part of the U.S. Department of Commerce, the MBDA aims to support minority-run businesses via their local resource centers and networking groups.

You can also look into the National Minority Supplier Development Council, which is a member organization dedicated to expanding opportunities for minority business owners. In addition to offering financing programs, the organization also provides counseling to its members.

Grants for veteran-owned small businesses

Certain government and non-profit organizations have programs to help veteran business owners obtain easier access to funding. The SBA in particular has a loan program and resource center for veteran-owned small businesses that need help acquiring capital. There are typically more franchising opportunities for vets than actual small business grants, but here are two good grant options:

  1. The 2501 Grant: Run by the U.S. Department of Agriculture, the Farmworker Agricultural Career and Employment Grants Program offers small business grants to veteran and minority farmers and ranchers who want to start or grow their agriculture businesses.
  2. Street Shares Veteran Small Business Award: Street Shares gives a yearly grant to veteran business owners or spouses of military members whose businesses have had a positive social impact on the American military vet community. The first place winner receives $15,000, the second place winner receives $6,000, and the third place winner receives $4,000.

Consider alternative financing options

If you have a difficult time finding a small business grant that applies to you and your operation, consider other financing solutions. Depending on what stage your business is in, you may want to apply for a business credit card, look into equipment financing, connect with venture capitalists, or research term loans.

The SBA, for instance, gives microloans of up to $50,000 to women and minority-owned small businesses, while online lenders like Funding Circle offer loans to businesses of all sizes looking to grow. To figure out what works for your business, check out our guide to financing or learn more about our term loans.

*Disclaimer: All grants listed on this page were open as of April 2019, though that is subject to change.

Funding Circle

Tags: Business credit

Updated: May 5, 2019

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