When searching for information on small business grants, you’ll find that there’s a ton of information out there and that it’s often conflicting. If you see the words “free money,” run. While it’s true that small business grants provide funds that don’t need to be paid back, unlike small business loans, actually getting a small business grant isn’t an easy process and many businesses don’t qualify. Additionally, small business grants often require the recipient to spend the money on very specific things, so there’s less freedom to spend the funds on whatever you feel like.
To clear up some of the confusion, we’re going to break down the small businesses most likely to receive grants, the most common types of small business grants, and how to apply for a grant.
Small Business Types Most Likely To Receive a Grant
So what types of businesses are most likely to qualify for a small business grant? Essentially, businesses that provide a service that gives back or focuses on progress, such as a medical lab conducting research or a local business that improves upon its community. This doesn’t mean that if you own a for-profit business—that isn’t necessarily serving the greater good—that you’re not eligible for some grants (more on this later), but it does narrow the possibility.
Businesses in the following sectors are the most common to be approved for a grant:
It’s good to think outside the box here. Your small business doesn’t need to eliminate world hunger to receive a grant, it just needs to work toward providing solutions and making improvements.
Common Types of Business Grants
There are many types of business grants available and then many more individual grants within each type. Here are the most common:
Federal Business Grants
Federal Business Grants are typically given to business in the fields of health, science, and technology.
State-Level Business Grants
These types of grants often work alongside federal business grants and are given to businesses that focus on providing solutions or addressing concerns that impact communities within a state. Given the niche quality of state-level small business grants, there’s usually less competition for businesses looking to receive grant funds.
Local Business Grants
For businesses that impact local communities, local small business grants are often given by cities, towns, and nonprofits.
Corporate Business Grants
Some corporations offer corporate business grants, often as a PR tactic. If you own a for-profit business that isn’t specifically looking to positively impact a group or community, this is likely the grant type for you. Corporate business grants often involve more work on the business’ side, as they usually entail pitching or other types of contests.
Small Business Grants for Protected Classes
There are also small business grants available to business owners who are protected from discriminatory laws and practices. These grants generally serve to assist individuals who have historically faced social and economic challenges.
Among these types of grants, a few include small business grants for:
How To Apply For a Small Business Grant
The steps you must take when applying for a small business grant depends on the grant you’re seeking and its requirements. This can vary based on the type of small business you own, your industry, the grant you’re trying to secure, and, in some cases, where your business is based.
There are, however, a few application materials it’s almost certain that you’ll need to provide, regardless of the grant you’re applying for. Before applying for small business grants, you’ll need to compile the following details:
An Overview of Your Business
This seems obvious, but you’ll need to provide clear details about what your business does and other pertinent information, such as when it started, the business’ mission, number of employees, etc.
Your Need for the Funds
Small business grants are given to businesses that know exactly how they want to leverage the funds. You’re more likely to get approved for a grant if the ways in which you want to spend the money provide a solution to a problem.
As mentioned earlier, grants often have rules about how the money can be used, so you’ll need to know exactly how you intend to use it. Better yet, also have a game plan for tracking the impact your business makes once you have the additional funds. While you won’t be paying back the grant in funds, there is an expectation that your business will pay back in service.
A Budget for the Grant Money
To truly know how the grant money will be spent throughout your business, it’s imperative that your accounting is in great shape. Books should be clean and accurate, and there should be an understanding of future expenses and how you’ll pay for them.
If you need help shoring up your accounting, consider utilizing automated accounting software with human support available.
The Key to Seeking a Small Business Grant
Small business grants require a ton of research and preparation. Before applying, make sure you have surfaced all potential grant options for your business, verified that you qualify, and compiled all the necessary documents, information, and plans needed. Though preparing for and applying for small business grants can take a lot of work up front, the impact of the granted funds for your business is invaluable.