Small-Business Grants: Everything You Need to Know
What Is a Small-Business Grant?
A small-business grant is like a special gift, usually money, given by an organization (often a company, foundation, or government) to a business to help them achieve a specific goal or boost their performance. The great thing about grants is that they’re essentially free funds, and you usually don’t have to pay them back.
These grants are designed for various purposes, like starting a new business, making an existing one more efficient, or supporting its growth. However, it’s important to remember that grants aren’t a blank check. You need to use the money according to the terms of the grant, and if you don’t, you might have to return it – and possibly with some extra charges like interest. So, while grants are a fantastic opportunity, they do come with some rules to follow.
How Small-Business Grants Work
Grants are designed for specific purposes, and applying for them can be quite a thorough and time-consuming process. When it comes to federal grants, the government has what they call “the grant lifecycle,” which has three main phases.
Pre-Award Phase: In this stage, the government agency that gives out the grant decides what they want to fund. They then announce the grant (or grants), accept applications, and carefully review them.
Award Phase: This is when applicants find out if they’ve been approved for the grant. The agency then collaborates with the grantee(s) to finalize all the legal details for the funding, and once everything’s in order, the funds are provided.
Post-Award Phase: After getting the grant, a grants management officer is assigned to make sure everything is on track. They oversee grant compliance by reviewing regular reports submitted by the grantee(s) and even conducting on-site audits when needed. Finally, once it’s clear that the goals have been met and the funds have been used correctly, the grant is closed out.
For non-federal grants, the level of scrutiny and monitoring may vary, but the overall process is quite similar. It’s all about ensuring that the grant money is put to good use and achieves its intended purpose.
Types of Grants for Small Businesses
When it comes to small-business grants, there are actually five general types you can explore, and there are plenty of grantors out there offering opportunities. These categories can sometimes overlap, and the options are so numerous that we can’t cover them all in just one article.
To kickstart your search, the government website grants.gov is a fantastic resource for federal business grants. They’ve got a massive database with thousands of available grants waiting for you.
Another great online database is GrantWatch, which boasts over 27,000 grants, including more than 1,000 specifically for small businesses. You can join for free or opt for a subscription that lasts a week ($18), a month ($45), a quarter ($90), or a year ($199). Subscribing gives you extra perks like keyword search and full grant details.
Now, let’s take a look at some examples of grants to give you an idea of the kind of assistance out there and where to start your search.
Federal small-business grants
The U.S. Small Business Administration (SBA), a federal agency, is a go-to source for various small-business grants that serve specific purposes. Let’s break them down:
Research and development: If your business is into scientific research and development, you might be in luck. The Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs offer grants in this field.
Management and technical assistance: The SBA’s 7(j) Management and Technical Assistance Program is a helping hand for small businesses that provide management and technical guidance to others. The aim is to boost their competitiveness in securing government contracts at federal, state, and local levels.
Export development: The SBA’s State Trade Expansion Program (STEP) gives financial awards to state and territory governments. These funds assist small businesses in learning the ropes of exporting their products, participating in foreign trade missions, marketing internationally, expanding their e-commerce potential, and more.
Entrepreneurship promotion: These grants aren’t directly for small businesses but are meant for community organizations that promote entrepreneurship through counseling and training programs. This includes support for veteran-owned and service-disabled veteran-owned businesses and government-sanctioned “small business development centers.”
And there’s more! The U.S. Department of Agriculture (USDA) also chips in with grants for rural small businesses:
USDA rural business development grants: These grants provide technical assistance and training for small rural businesses. They’re typically defined as having “fewer than 50 new workers and less than $1 million in gross revenue.” The aim here is to support projects that benefit rural areas or towns outside larger cities.
So, if you’re in the world of small business, there are opportunities out there to explore. These grants can be a great boost for your business goals!
State or regional small-business grants
Just as a reminder, the SBA isn’t the only player when it comes to grants for small businesses. There are a couple of noteworthy programs from the U.S. Department of Commerce:
Minority Business Development Agency (MBDA): This agency supports minority business enterprises, including those owned by African Americans, Asian Americans, Hasidic Jews, Hispanic Americans, Native Americans, and Pacific Islanders. They have a network of business centers, specialty centers, and grantees that provide customized business development services at the state and regional level. These services aim to improve access to capital, contracts, and markets.
Economic Development Administration (EDA): The EDA has a range of grant programs, from planning to infrastructure development. These grants are designed to boost local efforts in building, improving, or leveraging economic assets, ultimately helping businesses succeed and regional economies thrive. Their priorities include projects that promote equity, economic resilience, workforce development, technology-based growth, sustainability, and international trade. Keep in mind that EDA grants are competitive, and each state has its own agency to administer them.
Now, let’s not forget that many states and regions also offer their own small-business government grants. Here are a couple of examples from New York and Texas:
Neighborhood business grants (New York): The Citizens Committee for New York City (CitizensNYC) provides grants of up to $10,000 to neighborhood businesses, with a focus on supporting businesses owned by people of color, immigrants, and women. These grants prioritize businesses that actively contribute to the communities they serve.
Skills for Small Business grants (Texas): The Texas Workforce Commission (TWC) runs the Skills for Small Business program, which has a budget of up to $2 million. It offers grants to help employees pay for training programs offered by local community or technical colleges, or the Texas A&M Engineering Extension Service (TEEX). To qualify, businesses must have fewer than 100 employees. The grant can be used to train new workers (up to $1,800 per person per year) or enhance the skills of existing employees (up to $900 per person per year). These employees must be full-time workers.
So, depending on your location and business goals, there are various avenues to explore when it comes to securing grants that can give your business a boost. It’s all about finding the right fit for your specific needs.
Corporate small-business grants
Corporations often care about showing a positive face to the public, and one way they achieve this is through philanthropy. This can take various forms, including grants to support worthy causes, often in the nonprofit sector, but it can also mean providing small-business grants. Here are a couple of examples to give you an idea:
DoorDash Disaster Relief: You know that popular food delivery company, DoorDash? Well, they’ve got a relief fund that offers $10,000 grants to selected restaurants across the United States, Puerto Rico, New Zealand, Australia, and Canada that have been affected by natural disasters like fires, floods, and hurricanes. To qualify, the restaurant should have a brick-and-mortar location (and no more than three of them), employ 50 or fewer people, have been open for at least six months, and have revenues of $3 million or less per location.
Visa Everywhere Initiative: The company behind the widely used Visa credit card hosts a global competition for fintech startups from five regions around the world. They offer a $50,000 Overall Winner grant to companies that provide innovative payment and commerce solutions to consumers and businesses. There’s also an Audience Favorite grant of $10,000 and a Visa Direct grant of $10,000 up for grabs. Additionally, there are local and regional grants ranging from $10,000 to $40,000. Note that applications for 2023 are closed, so keep an eye out for 2024.
FedEx Small Business Grant Contest: The renowned delivery company runs a grant contest for small businesses to help them grow and enhance their operations. To qualify, your company should be for-profit, have a valid FedEx business shipping account number, currently ship with FedEx, and have fewer than 99 employees. In 2023, they awarded grants of $30,000 each, along with $1,000 worth of FedEx Office print services, to 10 small businesses.
These are just a few examples of how corporations are giving back and supporting small businesses. It’s always a good idea to keep an eye out for such opportunities as they can make a significant difference in helping your business thrive and grow.
Specialty small-business grants
Grants are amazing resources, and while they all have specific goals, some are designed to support specific groups. It’s all about making sure everyone gets a chance. Here are a couple of examples:
Queer to Stay Initiative: This initiative, a collaboration between the Human Rights Campaign, Showtime, and Visa, is all about providing support to LGBTQ+ small businesses across the country in 2023. Their main mission is to ensure safe spaces for the LGBTQ+ community remain open. To qualify, you need to be a U.S.-based for-profit business that primarily serves the LGBTQ+ community and can explain how the Covid-19 pandemic has had a negative impact on your business. They’ll also give special consideration to community-owned businesses. Keep in mind that the application deadline is August 31, 2023.
Military Entrepreneur Challenge: The Second Service Foundation runs this fantastic nationwide grant program, giving veteran, military spouse, and Gold Star family entrepreneurs a platform to network, learn, and compete for capital to grow their small businesses. Here’s how it works: you prepare a pitch for your business and deliver it first to a panel of judges and then to a live audience. The judges select who moves on to the final round, and the audience decides the winner. The grant amounts and prizes vary depending on the event. In the upcoming 2023 Challenge round in Arlington, Texas (scheduled for October 4-6), cash grants range from $1,000 to $2,000. Plus, there’s a $5,000 PR package and a $25,000 in-kind legal services package up for grabs.
These grants are not only opportunities to help your business but also a testament to the importance of supporting various communities and groups in their entrepreneurial journeys. So, if you fit the criteria, consider giving them a shot!
Absolutely not! Loans and grants are quite different.
Let’s break it down:
A loan is like borrowing money from a friend and, eventually, you have to pay it back, often with a little extra (interest) as a thank-you gift.
On the other hand, a grant is like getting a gift – you don’t have to give it back! It’s money that’s given to you, and you can use it for your business without worrying about paying it back later.
So, loans are like borrowing, and grants are like receiving a generous present!
You’re absolutely right! Grants are indeed considered taxable income at both the federal and state levels, unless there’s a specific law that says otherwise.
In simple terms, it means you might need to share a small portion of that generous grant with Uncle Sam and your state tax folks when tax season rolls around. So, it’s a good idea to keep that in mind when planning your finances.
It’s all about the grantor’s rules! Whether you can use a grant for personal expenses or not depends on what the grantor says in their terms and conditions. If they give the green light, then you’re good to go. But always make sure to read the fine print and follow their guidelines to the letter.
No need to worry! A grant won’t magically vanish unless you don’t meet all the grant’s requirements. As long as you fulfill all your grant obligations, it’s here to stay and support your business dreams. So, stay on top of those grant requirements, and you’re good to go!
