Editor’s note: At Lantern, we strive to help you make financial decisions with confidence. To do this, we occasionally feature content that includes information about our partners and their products or services. We do not provide, endorse, or guarantee any third-party product, service, information or recommendations—and our opinions are our own.
While, certainly, taking out a business loan or line of credit is one way to expand your business’ working capital, there’s another option to consider: small business grants.
What is a Small Business Grant? Grants are lump sums awarded to a business or business owner that, unlike loans, do not have to be repaid. Grants could be awarded by federal, state, or local governments or private corporations. Some grants have stipulations about how the money has to be used in the business. Others do not. At the end of the day, getting free money to start a small business sounds pretty great, doesn’t it?
Why Consider Small Business Grants?What could a business do with a lump sum of money? Maybe add new product lines, open a new location, or hire more staff to help serve more customers.Here’s an example: maybe you own a coffee shop and have been roasting your own beans. Demand for the beans is up, but given that you manually pack coffee bags, you can’t keep up with that demand. A grant could provide you with capital to purchase an automated processing machine that quickly fills coffee bags and customer orders, thereby helping you bring in even more money.Small business grants allow you to do these things and more. Because grants don’t have to be repaid, businesses can use them to invest in a company’s growth and profitability.That being said, grants typically see high competition among businesses. Grant applications often require a great amount of information and financial details that many entrepreneurs don’t have the time or desire to pull together. Grants may have very specific requirements in order to qualify. But those willing to put in the effort, could be rewarded!
Where to Find Government Small Business GrantsThere are so many grants available, and most entrepreneurs don’t even know where to begin to look. A Google search is one way to get started. The Small Business Administration and other federal agencies list their government grants for small business on Grants.gov. There, you can search based on criteria like eligibility, categories, and funding agency.The State Business Incentives Database, put together by the Council for Community and Economic Research, also provides a list of federal small business grants, as well as loans, tax credits, and tax exemption programs in each state.
Private Company GrantsAdditionally, private companies often offer small business grants. Below is just a sampling of what’s currently available, but you can also search “business [industry] grant” to find more.
Visa Everywhere Initiative (VEI)This global program is open to start-ups and fintech companies and awards $150,000 to those companies that qualify, as well as valuable contacts in the issuer, acquirer, and merchant ecosystem.
FedEx Small Business Grant ContestThe FedEx Small Business Grant Contest is designed to help small businesses grow and scale their companies.
Nav’s Small Business GrantNav’s Small Business Grant awards up to $10,000 to small businesses each quarter. Applicants are asked for a challenge their business has experienced and how they will use the funds to solve that challenge.
NASE Growth GrantThe National Association of the Self-Employed offers a $4,000 grant to qualifying NASE members to take their businesses to the next level.
Grants to Start a BusinessWhile many grants are aimed at established businesses, others are designed to provide free money (and sometimes support) to start a small business.
The Small Business Innovation Research (SBIR)The Small Business Innovation Research (SBIR) and its sister program, the Small Business Technology Transfer (STTR), support small businesses with big ideas in technological innovation. The programs not only provide funding to qualifying small businesses, but also partner those small businesses with federal research organizations to help develop those ideas into commercialization.
The Halstead GrantThis grant is specific to a particular type of business owner: silver jewelry artists. The grant includes $7,500 in start-up business grants and $1,000 in merchandise to start a business.
Challenge.govIf you’ve got a great solution to an existing problem, you could submit your idea on Challenge.gov. This site is a hub for all prize competitions and challenges across the federal government and leverages crowdsourcing to come up with ideas that turn into businesses.
Grants for Women Business OwnersSome grants are only open to women who run businesses. Below is just a small selection of the small business grants for women available.
Cartier Women’s InitiativeThis program seeks women who are making a difference in the business world. In addition to grants of either $30,000 or $100,000, winners also receive business and financial coaching.
Amber GrantThe Amber Grant awards at least $104,000 to qualifying female entrepreneurs each month, as well as $25,000 annually.
Tory Burch Foundation Fellows ProgramThis Fellows Program provides eligible women running early-stage businesses with a one-year fellowship, $5,000 grant, workshops at the Tory Burch offices, and the opportunity to pitch their businesses.In addition to exploring the grants for women above, you might want to look at small business loans for women as a funding resource.
For those who have served in the military, there are small business grants for veterans.
The StreetShares Foundation Veteran Small Business AwardThe StreetShares Foundation awards eligible veteran small business owners up to $5,000 to run or grow a business.
Boots to BusinessThe Boots to Business program itself isn’t a grant but rather an entrepreneurship course, available to those serving active duty, veterans, and their spouses. Grantees may be eligible for support from the SBA for five years.Also consider small business loans for veterans, as there are many programs that may offer low rates to those who have served.
Grants for Minority Business OwnersOur final small business grants category is for minority business owners. Here are just a few of the minority small business grants available.
Galaxy of Stars GrantGalaxy of Stars is a directory of minority and women-owned businesses and offers a grant of $2,500 to eligible applicants to start or grow a business.
Enterprising Women of Color Grant CompetitionThis grant, targeting women of color, aims to help these women build a business, secure contracts and capital, and increase employment opportunities.
Asian Women Giving CircleThe Asian Women Giving Circle provides financial support up to $15,000 to eligible female Asian artists and groups in New York City.While each grant program will have different requirements for applicants, there are usually a few basic criteria that most share.If the grant is US-based, applicants may be required to be US citizens. If the grant is state-based, applicants may be required to be citizens of that state or doing business there. Additional requirements for certain grants may also include:
The key is reading all of the qualifications before applying to make sure you meet the criteria before investing too much time in the application process.The application process for small business grants can be time consuming and it’s important to note that each grant may have specific requirements in order to qualify. If you’re interested in applying for small business grants, there are a few things you can do to help set yourself up for success with the process. Firstly, take the time to set up a business plan if you haven’t done so already. If you do have one, consider refining it. Clearly explain your business and establish what sets it apart from other competitors. Small business grant applications may require financial data and other relevant information for your business, so having that information organized and prepared can help streamline the application process.Grant applications and grant writing may require meticulous attention to detail, so it may also be helpful to familiarize yourself with grant requirements before you start wading through the weeds of the application process. It’s important to follow the requirements for each grant closely, as missing information can mean your application won’t be considered. There’s no magic formula when it comes to being awarded grant money.While it’s not always the case, the smaller the grant, the less competition you might have versus a nationwide grant with thousands of applicants. Smaller grants may offer less money, but you could apply for multiple grants.Read the requirements carefully and do any necessary legwork in advance. You may need to register on a website to apply or qualify, and you may need an employer identification number or another business requirement to be considered.Have a business plan that is concise in explaining what you do (or plan to do) and how you would use the money.You can also consider hiring a grant writer who has experience submitting applications that are awarded grants. Yes, it will be an expense, but if you win, you may be able to cover it with the money you receive.
- You may only qualify for some grants if you have been in business for a certain period of time.
- You may need to operate a for-profit company (or, in some cases, the opposite: a nonprofit).
- You may need to have a business in a particular industry.
Alternatives to Small Business GrantsIf small business grants applications overwhelm you or you find you’re not being awarded small business grants, there are other options that can help you find the funds to launch or grow your business.There are small business loans for various types of businesses, whether you’ve been in business for six months or six years. The Small Business Administration typically offers the most competitive loan rates, so if you qualify for one, you can access affordable financing that you pay back over many years. That money can help you buy equipment to serve more customers, hire more employees, or expand office space.And if you don’t have great credit, not to worry. There are also “bad credit” business loans available for those who don’t meet credit requirements with the SBA or traditional lenders. However, it’s important to note that business loans for borrowers with bad credit generally carry a higher annual percentage rate (APR) and may also come with fees.Another option is crowdfunding for your small business, which allows business owners to raise money through individual donors or investors. Crowdfunding is one way to raise the capital you need without working with a lender.Small business grants provide free money to start or grow a business. Imagine what you could do with extra capital! The sky’s the limit.
No brands or products mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third party trademarks referenced herein are property of their respective owners.The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.SOLC20023
About the Author
Susan Guillory is the President of Egg Marketing, a content marketing firm based in San Diego. She’s written several business books, and has been published on sites including Forbes, AllBusiness, and Cision. She enjoys writing about business and personal credit, financial strategies, loans, and credit cards. Follow her on Twitter @eggmarketing.