According to one recent study, there are currently more than 32 million small businesses operating in the United States. For the sake of discussion, know that this term refers to those organizations with fewer than 500 employees.
To put that number into perspective, those small businesses create more than 1.5 million new jobs every year according to the same research from above. That breaks down to about 64% of all new jobs annually. All told, over 90% of all businesses fall into this category – making them one of the biggest drivers of economic growth that there is.
At the same time, any seasoned entrepreneur can tell you that starting your own business is not easy regardless of its size. It takes a lot of time, effort, passion, and money to get a company off the ground in any industry.
That, in essence, is what small business grants are designed to aid with. They may not be able to help with the time or effort parts, but they can and often do provide the necessary capital to get a company off the ground and moving in the right direction.
But what are small business grants, where do they come from, and how do you take advantage of them in your own situation? The answers to questions like those require you to keep a few important things in mind.
What is a Small Business Grant?
At its core, a small business grant is exactly what it sounds like – seed money that has been given to a startup company or project, typically by a government agency or nonprofit organization, that is used to give you the best chance possible at success.
The major advantage of getting a grant of any type is that it gives you access to funds you wouldn’t have otherwise had. In the context of a small business, this can help secure that perfect location for your physical storefront or hire enough employees to get started on developing your products and services. There’s also no rule that says you can only apply for and receive one grant during your lifetime – there are many that you can apply for so long as you qualify.
All told, there are several different types of grants that you can apply for depending on your needs. Take those offered by the Small Business Administration, for example. The SBA regularly offers grants for the purposes of research and development under the Small Business Technology Transfer program. This is money designed to encourage you to focus on R&D opportunities that have “a high potential for commercialization if successful.”
Another type of grant offered by the SBA has to do with those aimed at management and technical assistance. This is offered under the appropriately named Management and Technical Assistance Program.
When it comes to the SBA in particular, however, there are a number of important things to keep in mind when it comes to qualifying. For starters, the SBA does not actually provide grants for starting or expanding a business. So opening your doors or continuing to grow can’t be your priority – you need to fall into one of the categories outlined above.
You should also be aware that new grant programs are being developed all the time based on what is happening in the world, as was evidenced by the COVID-19 relief program that went into effect in 2020. So even if you don’t qualify for something with the SBA now, you should continue to check to see what is available on a regular basis because you never know what might happen.
Is a Small Business Grant Right for my Organization?
Generally speaking, a small business grant is a good choice for your company if A) you need the capital it would provide you with, and B) you meet the qualifications of whatever program you’re looking at, to begin with. Remember that because it is a grant, the money typically does not have to be repaid.
Of course, there are some potential disadvantages of grants that you should be aware of moving forward. For starters, the process itself is very time-consuming. Not only do you have to research available grants to make sure that you qualify, but you’re going to have to write a proposal to outline exactly what you’ll be doing with that money and to prove that you qualify.
Grants are also very difficult to receive in a lot of situations because funds are limited. There isn’t an endless pool of money to draw from – only a handful of organizations may get selected for a grant in any particular year. In some cases, only one organization may get selected. For both of these reasons, it’s not a good idea to rely solely on grants alone when it comes to making your long-term plans as a small business owner.
Speaking of long-term plans, just because you received a small business grant once doesn’t mean that you’ll automatically do so again. Renewal is not a guarantee, which again can make the future uncertain.
Finally, depending on the specific grant and who is giving out the money, there may be strings attached that you are uncomfortable with. Once you submit your proposal for example and outline exactly what you’ll be doing with the funds, you have to stick to that plan to the letter.
So if you find yourself in a situation where the grant money would offer significant benefits and none of the potential downsides are a deal breaker, exploring the opportunities of a small business grant is definitely the right move to make.
Where Do I Find Small Business Grants?
Finding small business grants is something that you can do in a myriad of different ways. As mentioned, you can use the Small Business Administration’s website to get started.
There are also many sites like Digital.com that compile lists of small business grants that you can apply for in the given year. It is also encouraged that you use the Internet to find Small Business Development Centers in your area, as well as local incubators. All of these can be great sources of information throughout this process.
How to Apply For (and Win) Small Business Grants
Applying for small business grants typically involves following the directions listed on the grant’s website. Again, you’ll need to make sure you qualify and provide any documented proof that is required. You’ll also likely need to submit a proposal outlining where that money will be going and why it matters.
Be as convincing and as passionate as possible in your proposal while making sure that it falls within the listed guidelines. Show someone the real, tangible impact that capital will make. The more compelling you are, the better your chances of winning that grant.
In the end, small business grants certainly bring with them many distinct advantages. However, you do need to get your expectations in order before you apply. Winning one is often not a guarantee and you shouldn’t depend on this as your only source of income for any period of time. But the money can and often does help small businesses of all types succeed, regardless of the industry that they’re operating in. If nothing else, it is a resource that is worth exploring.
If you want to talk over your business or possible startup idea, give this office a call.