Finding Free Grants for Small Business
There’s lots of money for small business if you know where to look.
If you dream of starting or expanding a business, but have limited access to capital, free grants are an option. Unlike business loans, there’s no need to repay small business grants. All you have to do is apply and qualify, then you’ll receive the stipend to use. Sounds simple, right?
Business Grant Gotchas
Unfortunately, it’s not quite as easy as that.
Business grants are often strict about what you can spend the money on, whereas business loans allow you freedom and flexibility to use the funds on anything business related. For instance, if you receive a grant earmarked for developing a new environmentally-friendly product, you may be required to spend the money on research and equipment, rather than the raw materials you need to create the product.
Qualifying for small business grants is also often difficult. Finding them in the first place can be even harder because there’s a ton of misinformation out there. If you manage to find some federal small business grants, you’ll often discover they are full of complex restrictions that mean you don’t qualify. Grant eligibility varies based on a number of factors such as years in business, location, business industry, revenue to date, socioeconomic factors, and purpose of the funding.
That said, free money is free money and if you have the time, finding and applying for small business grants can help your business prosper.
Federal Small Business Grants
Grants.gov is the place to search for free small business grants. Most of the federal grants are for companies in technology, science, or health. If you win one of these grants, the federal government may hand the funds directly to you, but often they determine eligibility and pass the funds to state and local governments to distribute.
Federal sources of grants can be a variety of departments and agencies. To name a few: the Small Business Technology Transfer Program, the Small Business Innovation Research Program, NASA, the National Institutes of Health, the National Science Foundation, and many, many more.
State and Local Small Business Grants
Grants at the state level are generally targeted toward that state’s social and economic concerns. These grants are designed to work with federal grants and other state grants, so each award is less funding than what you may get from a federal grant. Because of lower competition, however, these grants are more accessible. Many grants are matching grants, meaning that instead of just handing the money over to you, you’ll be required to match the money they give.
You can find grants in your state by looking at your state’s department of commerce website, or checking to see if they have their own grant website.
Many cities, towns, and local nonprofit organizations finance grant programs. You’ll have a better shot at winning the grant if your business has a demonstrable way of servicing your community.
To find local grants, look at your city and town websites, or contact your local chamber of commerce.
Corporate Small Business Grants
Getting a grant from the government is wonderful, but with such specific requirements and low funding amounts, it can be difficult to make headway. Corporations often provide small business grants to contest winners because it’s good public relations.
Many corporate sponsored small business grants involve a pitch competition. Not of all of them do, but typically this means applying for corporate grants requires more work. It’s worth the effort for most small businesses, because you’ll typically get publicity and the chance at some runner-up prizes.
Corporate small business grants run the gamut of industries and applicant requirements:
- National Association for the Self-Employed (“Worth up to $4,000 each, NASE Members can apply for small business grants.”)
- Idea Cafe Grant (“You don't even have to prepare a complete business plan. We just ask that you sign up as an Idea Cafe Regular.”)
- The Halstead Grant (“The Halstead Grant is an annual award for emerging silver jewelry artists.”)
Targeted Small Business Grants
The federal government provides grants and support to specific communities based on a variety of criteria, whether social, economic, or geographic.
Options for these include:
- Minority Business Development Agency (MBDA): MBDA provides grants to organizations that operate MBDA's Minority Business Centers throughout the United States. These organizations provide business consulting, procurement matching, and financial assistance to minority-owned firms.
- Community Connect Grants: Helps fund broadband deployment into rural communities where it is not yet economically viable for private sector providers to deliver service.
- Rural Business Enterprise Grants: Competitive grant designed to support targeted technical assistance, training and other activities leading to the development or expansion of small and emerging private businesses in rural areas which will employ 50 or fewer new employees and has less than $1 million in gross revenue.
The money is out there but grant applications can require a lot of time and effort. You’ll need to consider whether applying for the grant will take too much time away from other parts of your business. To win, prepare yourself for the lengthy process by ensuring your business is a good match for the grant, and that you take care to provide complete and accurate information on the application.