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Many small businesses, at one point or another, need capital to grow. Often, that capital comes in the form of a small business loan. However, another option to consider is a small business grant. Unlike loans, grants do not need to be repaid.In order to access what is essentially “free money” for your venture, however, you need to not only meet the qualifications of a grant, you will also need to write a compelling and detailed small business grant proposal.Before deciding whether a grant or loan is the best option for you, here’s what you need to know about applying for a small business grant.Recommended: How Do You Find Venture Capital for a Startup?
What Is a Small Business Grant?A small business grant is money that's given to a business for a specific purpose or objective. Unlike business loans, these funds do not have to be paid back.There are a variety of government, nonprofit, and private entities that fund grants for a wide array of projects and programs. Businesses can qualify for grants for many reasons, whether it's because the business supports a specific government initiative or because it’s owners meet certain qualifications (such as being women or minorities). Unlike a lender, who wants you to demonstrate your ability to repay the loan, an agency that offers grants typically wants to see that your business aligns with its mission or a specific initiative. In order to be considered for a grant, you'll need to apply for the grant and provide any documentation requested in the application. This process is called "grant writing."Recommended: Applying for a Small Business Loan in 6 Steps
What to Include in a Small Business Grant ProposalThe general goal of a grant proposal is to make it clear why you need the grant, how you plan to use it, and how the funder’s interests align with your goals.While every grant proposal has different requirements, most include the following sections.
1. Cover Letter Your cover letter is your business’s introduction to the grant committee, and it should entice them to want to learn more about your business by reading the rest of your small business grant proposal.You'll want to address your letter to a particular person, briefly state what your proposal asks for, and summarize your program. There’s no need to go into detail; you’ll cover that elsewhere.Unlike the rest of your grant application, the letter can be less formal and address the reader more directly.
2. Table of ContentsIf your grant proposal has many pages, it can be useful to create a Table of Contents to help readers flip right through to the section they want to see. This makes the grantor’s life easier and shows both courtesy and professionalism on your part.
3. SummaryThe summary, also often called the “executive summary,” is a brief synopsis of the entire proposal and helps the grantor to understand at a glance what you are asking. It should introduce your business, market segment, proposal, and project goals. It should get to the point quickly, but include sufficient detail and specifics.
4. Problem StatementGrant programs provide money to businesses to solve a problem, not just to pay their bills. The Problem Statement is where you want to define and address the scope of the problem, and also explain what your business will do that someone hasn’t.You’ll also want to include why you are qualified to implement the project, and that you need the grant to do so. Be sure to include research and data as it applies.
5. Project DescriptionThis is the main section of the grant proposal and where you’ll go into more in detail on how your project will function. Will you need to buy equipment? Hire staff? Invest in marketing? Is this project already up and running? If so, how will you use the funds? It’s a good idea to do your homework to set a budget so readers see you’ve done your due diligence and plan to use the money effectively.
6. Objectives/Goals This section explains what you hope to accomplish with the project (goals) and how success will be measured (objectives). Though they sound similar, goals and objectives should be separated. Think of goals as general outcomes — you don’t need to list anything in intense detail, just give the reader an idea of what the potential grantee is trying to achieve. Objectives, on the other hand, are the particular steps you'll take to get to those outcomes, such as obtaining a certain percentage of the market. You may want to break down objectives in a bulleted list so it’s easier to read.
7. Timelines Every plan needs a timeline. How soon can you achieve your goals? Do you have mini milestones along the way? Visual timelines often work well to show the funder exactly where everything fits into the scheme of things as well as when. This section shows you not only have goals and objectives but that you also know how to achieve them using a detailed and well-thought-out plan.
8. Team Members, Sponsors, Partners (If any) This is where you have a chance to explain why the funder can trust you to use its funds responsibly and efficiently. Who are you? Why is this project so important to you? What experience do you and your partners (if you have them) have in this area that makes success a likelihood? Be sure to include a short history of your organization, including your mission and philosophy, the population you serve, and your business track record (success stories). You can also include a biography of key staff, client recommendations, and any industry certifications.
Tips for Writing a Great Small Business Grant ProposalCompetition tends to be fierce for small business grants, so you’ll want to do everything you can to stand out. Here are 10 ways to increase the odds of getting your grant approved.
1. Make Sure You QualifyThere are many grants available, from federal and local governments as well as private companies and nonprofits. By no means should you try to apply for all of them. Each grant has specific requirements, so you’ll want to carefully review them to make sure your mission and purpose aligns closely with those of the funder. Apply for only those grants that seem to be written for your business.
2. Read SamplesIf you’re new to grant writing for small businesses, it can be extremely helpful to read grant proposal samples. You can ask if the grant you’re applying for can provide samples of past winners' proposals. If not, there are examples of small business grant proposals available online. You don’t want to copy these, but they can give you a general direction of where you can take yours to stand out.
3. Consider Hiring a Grant WriterIf writing isn’t your forte, it may be worth the expense to hire a professional grant writer, especially if you plan to apply for several grants. Grant writers or consultants have the experience needed to perfect a proposal, and may be able to help you secure the money you need.
4. Plan Around DeadlinesApplying for a grant isn’t something you sit down and knock out in an hour. Each proposal will require time, effort, and research. As you pinpoint grants you qualify for, you may want to keep a spreadsheet with deadlines and requirements for each, then plan to spend ample time gathering what you need for each before that deadline comes around.
5. Start with a Template (and Modify)You can save time by reusing some of the information you’ve used for one grant proposal for others. Just make sure you carefully review and edit a new proposal to match what’s required for that one. The last thing you want to do is send a generic cover letter that doesn’t address what’s been asked of you because you were in a hurry to apply for as many grants as possible.
6. Research the GrantThe more information you have about the grant and the organization behind it, the better your odds of winning. So, it can be well worth the effort to research who the funding agency or organization is, how long it’s been offering the grants, and what types of businesses have been awarded. Use this information as applicable in your proposal to show you did your homework.
7. Follow Instructions to the LetterThis is why you need to allow plenty of time to complete your proposal: rushing through it could mean you miss key requirements and then are disqualified. Read and read again what you are required to include in your proposal and make sure you do them exactly as requested.
8. Remove Your EgoIt’s tempting to talk about how great your business is, but a grant is more aimed at how you can help others. So it can be a good idea to focus on the community you’re trying to serve, rather than how this money will pad your pockets.
9. Provide Plenty of DetailGrant committees typically want to see that you know your market and your audience and that you have a clearly-defined plan for how you’ll help them. So, be specific about your business plan and financials, provide statistics to back up your problem statement, and research on the audience you want to serve.
10. Have Your Proposal ReviewedWhen it comes to grant writing for small businesses, it’s always a great idea to have one or more people review what you’ve written. They may catch things you missed or even grammatical errors. Spend plenty of time in the review process to make sure your proposal is as flawless as possible.
The TakeawayThere are numerous small business grants available, but in order to access this type of funding, you typically need to write a small business grant proposal. The goal of this document is to convince the person or organization awarding the grant to give it to your business. It should detail your business’s mission and activities, future goals, reasons for requesting the grant money, and plans for using the grant money. The process of writing your small business grant can seem daunting, but with careful preparation – and by following the application directions precisely – it’s possible to write your own proposal, even if you’ve never written one before.Because small business grants are competitive, however, it can be a good idea to explore other financing options while you’re waiting to hear back about your proposal. With Lantern by SoFi, you can compare rates from multiple small business lenders with just one application. There’s no fee or obligation, and it won’t impact your credit.
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About the Author
Susan GuillorySu Guillory is a freelance business writer and expat coach. She’s written several business books and has been published on sites including Forbes, AllBusiness, and SoFi. She writes about business and personal credit, financial strategies, loans, and credit cards.