Small business owners often struggle to understand how to raise money to help them launch their startups. Too many rush into taking on investors who consume part of their company’s profits and have a say in important decisions, even when their views don’t align with the founder’s vision.
For these reasons, we recommend that when you’re starting out, you look into what your federal government can do for you. You might be surprised that there is “free money” available through small business grants, and
Small Business Grants
First, a word about small business grants.
Though there are countless programs available at Grants.gov, remember: you don’t just fill out a form and wait to cash in. For any government grant program, you can expect a good amount of paperwork to fill out, and a waiting period to see if you qualify. These grants are built around providing access to company missions that will prove assets to their community, so also remember that the proof will be in the pudding.
For the purpose of this article, we will be focusing mostly on government grants located in the United States for residents and
To give you the best chances of getting a small business grant, the government advises that you thoroughly review all of the eligibility guidelines before applying. There will be technical, legal, and administrative prerequisites, and assuming you get the funding, there will be ongoing reporting and bookkeeping, as well as audits to ensure you are living up to the terms of the grant.
Examples of Federal Grants
Small Business Technology Transfer Program (STTR)
This program funds research in the R&D arena. However, for this grant, the small business needs to have a formal collaboration with a research institution. To qualify for STTR grants, you must operate a
U.S. Department of Agriculture Rural Development Business Programs
The USDA’s Rural Development Business Programs provide financial support and technical assistance to promote rural business growth. They offer loans, grants, and guarantees with the goal of enhancing economic opportunities and job creation in rural communities.
U.S. Department of Commerce Minority Business Development Agency (MBDA)
These grants and loans are designed to help
U.S. Department of Education Grants
The U.S. Department of Education (DOE) has various grants available to small businesses in the education sector. These grants can be made available for public schools, state agencies, or nonprofit organizations; however, also allows for applications from
U.S. Small Business Administration State Trade Expansion Program (STEP)
This program distributes federal funds through state entities and is intended to assist small businesses desiring to export their products, participate in foreign trade missions and shows, obtain entry to foreign markets, develop websites, and design international marketing products or campaigns.
U.S. Economic Development Administration (EDA)
The EDA is part of the U.S. Department of Commerce and offers ongoing funding opportunities for projects that support regional and national economic development including construction, planning, technical assistance, research and evaluation, higher education, and more.
State & Local Governments
You should also know that many federal grants for small businesses are distributed to state and local governments, so you should always check there, too, for specific programs that could help out your business. Speaking of specific programs, grants are not typically general in nature — meaning that they are meant to serve a certain purpose. Here are a few examples:
- The Small Business Innovation Research (SBIR) program invests in small businesses focused on R&D, specifically
high-tech innovation. - The Small Business Technology Transfer (STTR) program requires small businesses to collaborate with a research institution.
The FedEx Small Business Grant is a popular program (though technically FedEx is not a federal entity) that requires businesses to have shipping needs.
Small Business Loans
If you’re looking for a federal loan, there is no better place to start than at the U.S. Small Business Administration (SBA). You may have heard of the SBA before, but did you know that in addition to helping you secure loans, they will guide you through planning, launching, managing and growing your business?
At your fingertips, you will have access to free business consulting from experts and funded partner organizations like America’s Small Business Development Center (SBDC) network, which runs
- Free business consulting
- Advice for accessing capital
- Business planning
- Technology development
- Regulatory compliance
- Marketing
- International trade assistance
When you are ready to apply for funding from the SBA, they will match you to lenders near you that specialize in
These loans provide many benefits, like competitive terms, rates, and fees. Some loans come with ongoing support to help you start and run your business. And they offer lower down payments and flexibility you won’t find on your own.
The loans you can get from the SBA include:
7(1) loans — This is the most common SBA loan, and is used for
504 loans — This loan also comes with a $5 million cap and provides a fixed rate to finance major fixed assets that are used for business growth or creating jobs. Assets include things like existing buildings or land, new facilities, machinery, and equipment.
Microloans — These loans provide up to $50,000 to help startups launch or expand. The average loan is about $13,000 and is typically used to help small businesses expand with working capital, inventory, supplies, furniture, fixtures, equipment, or anything else that can enhance the business. Microloans cannot, however, be used to buy real estate or refinance existing debt.
The final loan worth mentioning that is offered by the SBA is the 8(a) Business Development program. This program is targeted at helping small disadvantaged businesses — those that are owned and controlled by socially and economically disadvantaged individuals. The goal of the program is to help “socially and economically disadvantaged entrepreneurs” help to “gain a foothold in government contracting.”
Unlike other loan programs, this program is divided into a
And as if that wasn’t enough, participants will get specialized business training, counseling, marketing assistance, and even executive development — all provided by the SBA and its partners. Plus, you may even be eligible to access surplus government property and supplies, SBA loans, and bonding assistance.
As with other programs, you will be expected to live up to certain goals and criteria on an ongoing basis, which the SBA will monitor through annual reviews, business planning, and ongoing evaluations.
Startup Business Grants From Private Companies and Nonprofits
Although we have been talking about federal and government grants and loans, there are also some great opportunities for grants in the private sector that are worth mentioning.
Many corporations and large nonprofits, like the National Association for the
Faire
If you own an independent retail store that opened within the last year — or plan to open this year — you may qualify for the Faire
Fast Break for Small Business
This grant program is funded by LegalZoom, the NBA, WNBA and NBA
ZenBusiness Grant Program
The ZenBusiness Grant Program offers $5,000 each month to new businesses that offer products and services that help their communities. To qualify, you must be at least 18 years old and have used ZenBusiness formation services within the last three to six months.
Amber Grant for Women
WomensNet gives three $10,000 Amber Grants each month and three $25,000 grants annually. Although startups are eligible for all grants, one of the monthly $10,000 grants is specifically geared toward new businesses. Filling out one application makes you eligible for all Amber Grants. To qualify, businesses must be at least 50%
National Association for the
When you join NASE, you can apply for quarterly Growth Grant opportunities. There are no
Venmo Small Business Grant
The annual Venmo Small Business Grant offers $10,000 grants to 20 business owners. This program also provides mentorship from industry leaders and the opportunity to be featured on Venmo’s social media pages. To qualify, you need to have a U.S. Venmo business account in good standing. The business should have less than 10 employees, less than $50,000 in annual sales and have sold $500 or more in goods and services at least three months before the start of the grant program.
Tory Burch Foundation Fellows Program
The Tory Burch Foundation Fellows Program is designed to provide funding, education and other resources to
Freed Fellowship Grant
The Freed Fellowship grant program offers a $500 grant to
Trust in Yourself
So what are you waiting for? Check out all of these sources of federal funding for startups, and as mentioned, don’t forget to research programs available in your state and locale. The federal government does its best to offer free money to stimulate small businesses through grant programs, and because there are so many programs, much of the money goes unclaimed each year.
Small business grants can be competitive, so don’t lose hope if you don’t qualify or aren’t accepted into a program right away. Turn to the SBA and SBDC in your area to qualify for
