Sign up for Funding Circle newsletter!
Get our latest news and information on business finance, management and growth.
Updated: May 5, 2019
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.
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:
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:
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.
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:
Many government agencies and organizations give grants to women business owners to support female entrepreneurship and help promote equity in the workplace.
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:
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.