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Starting a small business can be an exciting venture, but it can also be costly. Fortunately, there are various grants available to help entrepreneurs get their businesses off the ground. These grants can provide financial assistance and support for everything from research and development to marketing and advertising.
Key Points
- What would funding mean for the future of your business?
- Are you willing to take time to apply, in exchange for valuable funds?
- What areas of your business would benefit most from a startup grant?
What is a Small Business Startup Grant and How Does It Work?
A small business startup grant is a type of funding offered by various organizations to help entrepreneurs launch or grow their businesses.These grants are typically designed to provide financial assistance to small businesses that are just starting out and need help with things like product development, marketing, and hiring staff.
The application process for a startup grant usually involves submitting a business plan or proposal outlining the purpose of the grant and how the funds will be used. Grants may be awarded as a lump sum or in installments, and may be subject to certain conditions or restrictions.
It's important to note that startup grants are highly competitive, and not all applicants will be successful. However, for those who are able to secure a grant, it can be a valuable source of funding that can help kick-start their business and increase the likelihood of success.
What are eligibility requirements?
Eligibility requirements for small business startup grants can vary depending on the specific grant program and the organization offering the grant. However, some common eligibility criteria may include:
- Business type: Most grant programs are aimed at supporting small businesses that operate in specific industries or sectors, such as technology, healthcare, or green energy.
- Business size: Grants are typically only available to businesses that meet certain size criteria, such as having less than a certain number of employees or generating less than a certain amount of revenue.
- Location: Some grants may be restricted to businesses that are located in specific geographic areas, such as certain states or regions.
- Legal structure: Some grant programs may require that the business be organized as a specific type of legal entity, such as a corporation or LLC.
- Business stage: Many grants are specifically targeted at startups that are in the early stages of development and have not yet received significant funding.
- Purpose of the grant: Grant programs often have specific objectives or goals that the grant must be used to achieve, such as research and development, marketing, or hiring.
It's important to carefully review the eligibility requirements for any grant program before applying, to ensure that your business meets the necessary criteria.
List of Small Business Startup Grants
We put together a list of small business startup grants-although this list is by no means exhaustive-for you to begin your search.
SBA Grants
While the SBA does not provide grants for starting or expanding a business, it does offer several other types of grants. SBA grants are mainly focused on nonprofits and educational institutions focused on promoting entrepreneurship.
COVID-19 Relief Grants: The SBA is no longer granting funding due to COVID-19, but it is still granting PPP loan forgiveness.
Exporting grants for state entities: The State Trade Expansion program, or STEP. grants are specifically available to businesses focused on exporting.
Research and development grants: The Small Business Technology Transfer Program (STTR) and Small Business Innovation Research (SBIR) are federal grants for research-based institutions.
Management and technical assistance: The 7(j) Management and Technical Assistance program provides grants for small businesses who need assistance to grow so they can compete for government contracts.
500 Global Flagship Accelerator Program
The 500 Global Flagship Accelerator Program is targeted towards startups and allows applications on an ongoing basis. Each recipient goes through a 4-month accelerator program and receives a $150,000 investment and training on the full scaling of the startup.
You should note though, there is a $37,500 fee if selected, but this is deducted from the $150,000 investment.
Business Warrior Small Business Loans
Although not technically a grant, the Business
Warrior Small Business Loans offer lending options to startups and small businesses. Funding amounts range from $5,000 to $50,000 with interest rates as low as 9.97%. Business owners may be interested in these loans because the funding is quick (usually available in days) and can be paid back from 12 to 36 months.
Incfile Fresh Start Business Grant
The Incfile Fresh Start Business Grant offers up to $2,500 for startup costs along with numerous other benefits such as free tax consultation. You can apply for a grant if you’re starting a new business or expanding an existing one. In addition to the application, you must submit a business plan.
Hello Alice Small Business Growth Fund
Hello Alice sends weekly updates for grants available to small business owners, which you can apply for throughout the various stages of your business development-including the startup phase. Hello Alice partners with organizations to advertise the various grant opportunities available.
Verizon Small Business Digital Ready Program
The Verizon Small Business Digital Ready program offers free training to entrepreneurs, opportunities for networking, coaching, and incentives. It also provides access to over $1,000,000 in grant funding. Register for free and you’ll gain access to information regarding grant funding and applications.
Walmart Local Community Grants
Walmart offers grants to nonprofits, including Local Community Grants that range from $250 to $5,000. Grants are awarded to organizations and not individuals but the organization can apply at any time during the funding cycle. The funding ranges for projects such as community development to supporting public safety initiatives.
Industry-specific and diversity small business grants
There are numerous grant opportunities available specific to an industry or to promote diversity among entrepreneurs, including:
Alibaba.com Manifesting Grants Program: Alibaba.com partnered with Hello Alice to offer up to a total of $750,000 in grant funding. 50 grants are awarded to provide small businesses with resources and marketing tools to grow their businesses.
Amazon’s Black Business Accelerator Program: The Black Business Accelerator program through Amazon offers a variety of services, including marketing support and up to a $500 credit for new Amazon seller accounts, if you are a black-owned business.
Amber Grant Foundation for Women: The Amber Grant Foundation offers a $10,000 grant each month and two $25,000 grants per year to women-owned businesses, including startups and nonprofits. They offer several opportunities throughout the year but you only have to fill out one application.
BIPOC Small Business Grant by Annuity Payment Freedom: There are $100 monthly micro-grants available to BIPOC small business owners through Annuity Payment Freedom.
Etsy Emergency Relief Fund: If you are an Etsy seller based in the U.S. and you’ve experienced a natural disaster within the past year, then you can apply for the Etsy Disaster Relief Fund.
How to Apply for a Small Business Startup Grant
The process for applying for a small business startup grant can vary depending on the specific grant program and the organization offering the grant. However, some general steps that you can follow to apply for a grant include:
- Research grant opportunities: Start by researching grant opportunities that are available to small businesses in your industry or region. You can search for grants online or through business associations, government agencies, and other organizations.
- Review eligibility requirements: Before applying for a grant, carefully review the eligibility requirements to ensure that your business meets the necessary criteria. Make sure to also review the application process and any deadlines or other requirements.
- Prepare your business plan: Most grant programs require applicants to submit a detailed business plan outlining their business objectives, strategies, and financial projections. This plan should also explain how the grant funds will be used and how they will help to achieve the goals of the business.
- Gather supporting documents: Depending on the grant program, you may also need to provide additional documents such as financial statements, tax returns, and legal documents related to your business.
- Submit your application: Once you have completed your business plan and gathered all necessary supporting documents, you can submit your application according to the instructions provided by the grant program. Be sure to double-check all information and follow any formatting or submission guidelines.
- Follow up: After submitting your application, it's a good idea to follow up with the grant program to ensure that they have received your application and to ask any questions that you may have about the application process.
It's important to keep in mind that the process of applying for a small business startup grant can be competitive and may take some time, so it's important to be patient and persistent in your efforts.
How can I Use a Small Business Startup Grant?
Grants are typically available for a wide variety of business purposes. This includes everything from marketing and advertising, to implementation of new technologies and expanding operations. It could also include new facilities and equipment or hiring employees.
Each grant agreement will have its own set of stipulations, so you’ll need to review this information carefully-including whether or not you’re allowed to pay yourself with the funding.
Challenges For Startups Applying for Grants
While the prospect of receiving funding for your startup is exciting and you can likely think of a thousand ways to use the money, you should be aware of common pitfalls applicants often face.
Lack of knowledge about small business funding options: There are so many grant options available that it may be too overwhelming to select the ones you need to focus on. If this is the case, start with a manageable, realistic goal of how many you will apply to and set aside time in your calendar to devote to the process.
Too many applicants applying for the same grant: The bottom line is, the bigger the prize, the more applicants you’ll be competing against. While this shouldn’t sway you from trying, you may want to focus on small grants at first, which tend to have less competition.
Making a compelling case for your business: A lack of details and planning will take you out of the running. You have to spell out exactly how the funds are used, so the organization is confident the money is getting spent wisely and in support of their mission-not necessarily yours.
Tips When Applying For Small Business Startup Grants
Keep this in mind as you’re starting your business or in growth mode:
- Keep applying: New grants popup all the time. Set a reminder in your calendar to regularly look for new opportunities or apply for opportunities you might have missed in the past.
- Double-check your eligibility: Take a few moments to read the eligibility requirements before you start applying for a specific grant. You’ll save yourself quite a bit of time by avoiding ones you’re ineligible for.
- Refer to other examples: Find books from the library or check out proposals online for winning applications in the grant-writing process.
- Be specific: Present specific, detailed information on exactly where the funding will be used in your business. This lets the organization know you’re serious about using the money as intended.
- Keep your finances in check: While credit is not a factor for receiving money, organizations want to see your business is in good financial standing without a high debt load.
- Expect follow-up: The work isn’t over if you do qualify for the funding. You’ll likely be expected to provide regular and vigorous reporting to the organization.
Business Mentoring Organizations That Could Help
Applying for small business startup grants may feel like a full-time job, on top of the pressures of getting your company off the ground. It’s times like this where a business mentoring organization could prove invaluable. Use these as a resource for assistance:
SBA Small Business Development Centers: SBA created these centers to offer free assistance to startup and existing small businesses. Services range from business planning and creation, to accessing capital and funding.
SBA SCORE Business Mentor program: Similar to the SBA Small Development Centers, the SCORE program connects volunteers to local business owners to offer free mentoring for various areas a business owner might need assistance with.
Veterans Business Development: This business outreach program is also in conjunction with the SBA and the resources are specifically tailored to veteran-owned businesses-including applying for grants.
MBDA Programs: The Minority Business Development Agency was created by the Department of Congress to help minority businesses grow. The centers are located across the country and can assist a business with applying for capital, strategic growth, and a host of other important initiatives.
Professional and trade organizations: If your business is a member of a professional or trade association, you can inquire about mentoring programs or opportunities, which would likely be geared towards your industry too.
Alternative Ways to Get Funding for a New Business
In addition to small business startup grants, there are several alternative ways to get funding for a new business. Some of these options include:
- Small business loans: Many banks and financial institutions offer loans specifically designed for small businesses. These loans can provide funding for things like equipment, inventory, and working capital.
- Crowdfunding: Crowdfunding platforms allow entrepreneurs to raise funds by soliciting donations or investments from a large number of individuals. This can be a good option for businesses that have a compelling idea or product and a strong social media presence.
- Angel investors: Angel investors are high-net-worth individuals who provide funding to startups in exchange for equity in the company. They can provide not only funding but also valuable business advice and networking opportunities.
- Venture capital: Venture capital firms invest in startups that have high growth potential in exchange for a share of the company. This type of funding is typically available only to businesses that are operating in high-growth industries, such as technology or biotech.
- Personal savings or family and friends: Many entrepreneurs fund their businesses through personal savings or by borrowing money from family and friends. While this can be a good option for some, it's important to be mindful of potential risks to personal relationships and financial stability.
It's important to carefully consider all funding options and to choose the one that best fits the needs and goals of your business.
Maximizing Your Chances of Winning a Small Business Startup Grant
Winning a small business startup grant can be a game-changer for entrepreneurs looking to get their business off the ground. However, competition for grants can be fierce, and it's important to take steps to maximize your chances of success. One of the key ways to do this is by understanding the criteria that grant providers use to evaluate applications.
Many grants are designed to support businesses in specific industries or regions, so it's important to ensure that your business fits the eligibility requirements before applying.
Additionally, grant providers are often looking for businesses that have a clear and compelling business plan, with a strong strategy for growth and a detailed plan for how grant funds will be used.
Another important factor in winning a small business startup grant is to be diligent in your application process. Take the time to carefully review the grant application requirements and ensure that you provide all necessary information and documentation.
Pay close attention to formatting and submission guidelines, as failing to follow these could result in your application being disqualified. It can also be helpful to enlist the support of a business mentor or advisor to review your application and provide feedback before submitting it.
Building strong relationships with grant providers and other stakeholders in your industry can also help increase your chances of success. Attend industry events and networking opportunities to meet potential grant providers and other businesses that may be able to provide support and guidance.
It's also important to be persistent in your efforts, as winning a small business startup grant can take time and multiple attempts. By taking these steps, you can increase your chances of success and secure the funding needed to turn your business dreams into reality.
Small Business Grants: A Lifeline for New Ventures in a Challenging Economy
Small business grants can be a lifeline for entrepreneurs looking to start a new venture in a challenging economy. With the ongoing COVID-19 pandemic and other economic uncertainties, securing funding for a new business can be a daunting task.
However, there is variety of small business grants available that can provide critical financial support for new ventures.One of the benefits of small business grants is that they do not need to be repaid, unlike loans which can accrue interest and require regular payments.
This can provide entrepreneurs with greater flexibility and financial security as they launch their business.Additionally, many grants are designed to support businesses in specific industries or regions, providing targeted support that can help entrepreneurs overcome specific challenges.
However, securing a small business grant can be a highly competitive process, with many applicants vying for a limited pool of funds. It's important for entrepreneurs to carefully research and identify the grants that best align with their business goals and needs.
Additionally, it's important to prepare a strong and compelling grant application that clearly outlines the business plan, growth strategy, and intended use of grant funds.
By taking these steps and leveraging the resources available through small business grants, entrepreneurs can launch and grow successful businesses even in challenging economic times.
Success Stories: Small Business Startups That Got Their Start with Grants
There are many small business startups that have successfully gotten their start with grants. Here are a few examples:
- Goumi: Goumi is a sustainable baby clothing and accessories brand founded by two mothers. They received a $25,000 grant from the Girlboss Foundation, which helped them to expand their product line and grow their business.
- EcoScraps: EcoScraps is a sustainable gardening company that takes food waste and turns it into compost. They received a $22,000 grant from the National Science Foundation, which helped them to develop their technology and expand their operations.
- Two Bit Circus: Two Bit Circus is a technology and entertainment company that creates immersive experiences for events and attractions. They received a $100,000 grant from the National Science Foundation, which helped them to develop their technology and grow their business.
- Bitty Foods: Bitty Foods is a food company that creates protein bars and flours made from cricket flour. They received a $150,000 grant from the Bill and Melinda Gates Foundation, which helped them to develop their product and expand their operations.
- Goodie Girl Cookies: Goodie Girl Cookies is a gluten-free cookie company founded by a mother-daughter team. They received a $100,000 grant from Chase Bank, which helped them to expand their product line and grow their business.
These are just a few examples of small business startups that have successfully received grants and used them to grow their businesses. Grants can provide much-needed funding and support for entrepreneurs and startups, and can be a valuable resource for those looking to start and grow their businesses.
Final Words
Small business startup grants can be a great way to get the funding you need to launch your business. However, it's important to remember that grants are highly competitive, and the application process can be time-consuming and challenging. Be sure to thoroughly research the grant programs you are interested in and carefully follow the application guidelines.
Final Word
Small business startup grants may be the opportunity your business needs to hit the ground running. There is plenty of money available, you simply need to know where to look. While the process can seem long, staying organized and setting aside dedicated time to explore opportunities means your new business can get the share of funding it deserves.