Small Business Grants: Free Cash to Start Your Business
If you’re thinking of starting a small business, financing your venture is probably at the top of your concerns. It’s pretty much impossible to start a company without having the right amount of capital – obtaining cash to start a business is often the hardest part about entering any new entrepreneurial journey.
Traditional lenders will most likely turn you down – they don’t want to risk lending money to individuals who have little business experience. In addition, it’s hard to predict how successful your business will be before you start operating. There may be a few lenders that are willing to work with you, but they will charge extortionate interest rates to try and compensate for the risk they’re taking on.
Your other option is to sell equity in your company. But this will mean giving up the right to certain ownership components of your business. If you believe that you have the grit and determination to make it big, you won’t want to give up your equity so early on. So, what does this leave you with? Small business grants provide you with free money to start up a small business. This is a little-known program that has helped thousands of small business owners get off the ground – it’s a great alternative to traditional financing.
This guide will provide you with all the information you need to find free money to start your business. It provides in-depth analysis of small business grants and how they may be able to help you start or improve your current business.
What are Small Business Grants?
There is no single definition for a small business grant. But the general guideline is that it is a free grant provided by a government or private agency for a specific business related purpose. Both national and local governments attempt to encourage certain economic behavior by providing economic incentives for business owners.
Government agencies will put money aside to provide to small business owners who meet certain criteria. It can be hard to get a small business grant, but this is mainly because there are so many on offer – it can often be hard to find one that you’re eligible for. You will end up spending a considerable amount of time looking for grants that fit your criteria – but it’s worth it if you need access to free capital.
The reality is that most of the country has no idea that this form of funding is available. It’s a great resource that is seriously underutilized – make sure to take advantage of it if you can!
Small Business Grant Categories
There are a variety of different categories for small business grants. It’s a bit of a complicated web of different government organizations and initiatives, so make sure to have a look at any form of grant you suspect you may be eligible for! We will explore each of the major categories in more detail below. Keep in mind there may be more sub-categories available.
These are grants that are provided by the national government – there is money designated for individuals around the country. There are countless different federal grants available, so you’ll have to sift through them if you want to find the best ones. These grants can be found at grants.gov, usa.gov, and the Small Business Administration website.
These are grants that are provided by state or local organizations. They’re government grants, but they differ depending on what area you’re located in. The regional grants available to you will depend on the location your business is in.
Head to the Economic Development Administration’s (EDA) website to see the individual state offices and what they offer to their residents. There are also Small Business Development Centers (SBDCs) that offer grants at an even lower level.
There are plenty of private companies and organizations that offer small business grants to business owners who are looking to get some free funding for their businesses. Some of these funds will be provided to people of certain backgrounds – for example, women or minority business owners.
Other private grants are provided to people who win certain competitions. You will find that many companies hold competitions in which businesses can compete for free money. One such example is the annual FedEx Small Business Grant Contest, where businesses can compete to win a small business grant.
How Much Can I Get?
Grants are typically quite small when compared to other forms of business funding, but this is largely due to the fact that they’re free. Many grants are below $50,000, but there are grants that run into the millions. The amount that you’re entitled to will depend on the grant that you apply for and the eligibility of your business.
What’s the Process?
For federal business grants, you should head to grants.gov and begin searching for the different grants that are available to you. You can typically apply for federal grants online – although you will need to have proof that you qualify for the grants that you’re applying for.
For local government grants, the process will depend on where you’re living. Check the EDA office and start your search for local applications.
Lastly, private grants will vary depending on the organization providing them. Some will be contest-based, others will be awarded via applications. Make sure to keep up-to-date with deadlines. Unlike federal grants, many private grants have time limits on them!
If you’re worried about your ability to fund your business, but you don’t want to take on too much debt, grants are a great way to help bridge the funding gap. But remember, it is rare that a grant can provide you with all the funding that you need. You will most likely need a strategy that includes a variety of different funding types.
We offer advice and information on a range of different business funding options. Make sure to check out some of the other resources we have on our site. We’re one of the top resources on the web for business lines of credit – check out the rest of our blogs!
William Anderson has been working with small business owners for the past 10 years. He got his start at an investment bank, but felt that he was too detached from where real people were making decisions that affected local economies. As a result, he took his experience and his MBA degree to work helping local small businesses.