Starting a new business isn’t cheap.
Testing new products, researching market trends, securing inventory—there’s no shortage of costs for a startup business. But if you haven’t even started selling yet, where does the money come from?
Seasoned business owners might have a network of financiers, but for up-and-coming entrepreneurs, securing funding before you’ve had a chance to prove yourself can be tricky.
Every new business can do with a bit more cash, but the application process for grants involves more than putting your name on a list and waiting for a deposit. Not every grant is right for every business, and understanding how grant-issuing organizations evaluate applicants is crucial to securing the financial assistance you need.
If you plan on investing the time and energy into applying to a grant program, it’s important to understand the options available and pick the grant that’s right for your business.
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How do I get grants to start a business?
Small business grants are offered by all kinds of organizations, to all types of businesses, with a wide range of values, missions, and functions.
There’s no single set of criteria that can be applied to all grant opportunities, but generally, grant-lenders are looking for businesses that embody their organization’s stated purpose and add value to a particular community or industry.
Small business grants are not loans, so lenders aren’t expecting to be paid back. They’re not investment capital, either, so issuers aren’t expecting to own assets of your business. But that doesn’t mean that small business grants don’t come with expectations and incentives.
Issuers still expect a return on their investment, just not a monetary one. Instead, organizations that provide small businesses with grants want to feel confident that your business idea contributes to their organization’s mission—whether it be a common good, innovation in a particular industry, or economic growth in a specific community.
A grant isn’t necessarily “free money” either. Grant issuers often have stipulations about how the money can be spent, sometimes even spending the money themselves on specific resources they believe will help your business grow.
If you’re starting a business and looking to apply for small business grants for your startup, here are some key points to keep in mind:
Look for grants within your industry
A lot of small business grants are industry specific, so it can help narrow down your search if you focus on organizations and research institutions within your particular industry. Focusing on one industry also builds buzz around your business, and can help build connections with industry figures who may be able to offer guidance and investment opportunities.
Read the eligibility requirements carefully
It sounds obvious, but it’s not hard to overlook aspects of the eligibility requirements and end up putting a ton of effort into applying for a grant you’re ineligible for. Read the requirements carefully and evaluate whether you qualify for the grant. If you’re unsure whether you qualify, contact someone from the organization and ask.
Make sure your business aligns with the organization’s mission
Organizations that provide small business grants do so in the hopes of achieving a specific goal they care deeply about. Ask yourself how your business model helps contribute to achieving this goal. If the answer is hard to parse, you might want to consider applying for grants with another organization.
Know what you’ll be spending the grant money on
Some organizations may stipulate what grant money will be spent on, but even when they don’t, it’s still important to have an idea of how you plan on using the money. When an organization is determining whether to issue your business a grant, having a business plan and knowing how the money will be spent will help them understand more clearly how your business aligns with their mission.
Focus your pitch on innovation and expansion
Organizations that issue small business grants typically favor business that they see as innovative, forward thinking, and on a path to growth. Focus your pitch on how you plan to scale, any new technologies you might be developing, and what your business can do to help the organization with its mission.
General business grants
The US Small Business Administration (SBA) is a federal government agency that provides support for small businesses with the goal of strengthening the nation’s economy. The SBA offers a wide variety of loans, grants, and other funding programs:
- The COVID-19 Economic Injury Disaster Loan (EIDL) offers relief for businesses that have been affected by the pandemic, such as restaurants, concert venues, and other businesses.
- The State Trade Expansion Program (STEP) offers federal grants throughout the US meant to assist businesses in expanding globally, offering funds for foreign-market trade shows and expansion opportunities.
- The SBA offers a number of veteran assistance programs that provide funding for veteran-owned businesses.
- The Women-Owned Small Business Federal Contracting Program offers funds specifically to women-owned businesses, with the goal of leveling the playing field for women entrepreneurs.
- The HUBZone program provides assistance to small businesses with the aim of fueling growth in historically underutilized business zones.
- The Natural Resource Sales Assistance program assists small businesses in securing state and federal government contracts through a bidding system that prioritizes them. Eligible industries include timber and forestry products, minerals, coal, oil, gas, and real estate.
Other US government grants
- The US Economic Development Administration (EDA) offers a variety of funding programs for projects that support regional economic development. Grant recipients receive funding for construction projects, construction planning, technology development research, and more.
- The National Institute of Health is offering a wide variety of funding grant opportunities for businesses developing biomedical research related to COVID-19.
- The Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs offer funding for technological research for small companies, with the goal of promoting high-tech innovation.
- The US Department of Commerce Minority Business Development Agency (MBDA) has a wide variety of small business programs intended to assist with the growth and development of minority-owned businesses throughout the United States.
- The US Department of Energy clean energy grants are offered to businesses that have previously received SBIR or SBTT funding to assist in creating clean energy and to fund companies whose goals are to combat climate change.
- The US Department of Agriculture’s Rural eConnectivity Program offers grants to businesses and projects that assist rural communities in recovering economically from the impact of the COVID-19 pandemic, particularly in disadvantaged communities or that help to mitigate the effects of climate change within rural communities.
Non-government issued grants
- The Comcast RISE Investment Fund offers assistance for independently owned businesses providing funds for advertising, commercialization, and marketing consultations, media placements, commercial creative production services, and other technical assistance.
- Activist-minded outdoor brand Patagonia offers funding for small businesses seeking to address the root causes of climate change and confront environmental injustice.
- The National Association for the Self-Employed is an organization that provides a broad-range of assistance programs for small businesses, with the goal of keeping markets competitive and preventing monopolization by larger companies. The NASE offers growth grants of up to $4,000 for small businesses that it believes have the potential for growth.
- The 500 Global Flagship Accelerator program provides startup capital for fast-growing technology companies with the goal of promoting technological innovation.
- The Halstead Grant offers a grand prize of $7,500 in start-up capital, as well as smaller grants to businesses offering innovation and advancing the artistry of the jewellery industry.
- The StartOut Founders Program aims to provide resources for LGBT-owned businesses at all stages of their development, from aspiring founders just developing their ideas to established companies.
- The StreetShares Foundation is a non-profit organization dedicated to assisting veteran-owned businesses with access to financing and educational material. Its Veteran Small Business Award grants funds to veteran-owned businesses, especially ones that address social change within the military community.
Grants for Women-owned businesses
- The Women Who Tech Grants Program provides grants for women-owned tech and health tech startups, with the goal of closing the gender gap in the tech industry.
- The Cartier Women’s Initiative Regional Awards program offers yearly grants to women-owned businesses in their initial stages of development that are working to meet one of the 17 UN Sustainable Development Goals.
- IFundWomen is a marketplace for women-owned businesses to network and secure partnerships and financing opportunities. It often partners with companies like Adidas, American Express, Diageo, Unilever, Visa, and more to offer grants to women-owned businesses.
- The Foundation for a Just Society offers grants to local, national, regional, and international organizations that work to advance the rights of women and LGBTQI people. The FJS focuses its efforts in Francophone West Africa, Mesoamerica, South and Southeast Asia, and the US Southeast, as well as some areas of New York City.
- The Amber Grant Foundation is a community of entrepreneurial women who assist other women in starting their entrepreneurial journey. The organization gives away $10,000 each month and an additional $25,000 each year to women entrepreneurs.
- The Hello Alice Small Business Growth Fund offers grants of up to $5,000 to small business owners, “including women, people of color, veterans, LGBTQ+ folks, people with disabilities, and every American with an entrepreneurial dream and the will to work for it.”
- HelloAlice, in partnership with DoorDash, is also currently offering grants via their Restaurant Disaster Relief Fund, with the goal of assisting restaurants in recovering from the COVID-19 pandemic.
Grants for BIPOC-owned businesses
- The Power Forward Small Business Grant, a combined effort of Vistaprint, the Boston Celtics Shamrock Foundation, and the NAACP, awards grants of $25,000 on a rolling basis to Black-owned small businesses throughout New England, with the goal of creating entrepreneurial opportunities for underrepresented communities.
- Grow by Invoice2go is offering up to $15,000 to entrepreneurs that identify as Asian-Indian, Asian-Pacific, Black, Latino, Native American or Alaska Native, Arab or Middle Eastern, Native Hawaiian or Pacific Islander, LGBTQ+, or as a person with a disability.
- Go.Be. is a nonprofit organization dedicated to assisting BIPOC-owned businesses by offering tools and resources that promote growth and development. Among these is its Elevate Fund, which provides minority-owned businesses with up to $4,000.
- Offer by the SoGal Foundation, the Black Founder Startup Grant provides $10,000 and $5,000 cash grants to Black women and Black nonbinary entrepreneurs. It also provides resources for navigating the complex world of the Silicon Valley fundraising environment.
- Created in response to the COVID-19 pandemic, the BIPOC Small Business Grant from AnnuityFreedom.net offers recurring grants each month for entrepreneurs who are Black, Indigenous, or people of color.
- Backstage Capital is an investment fund that focuses on under-represented groups in entrepreneurship, offering funds for small businesses owned by women, people of color, and LGBT founders.
- Main Street America’s Inclusive Backing program offers funds to new entrepreneurs from under-represented communities—especially those harshly affected by the coronavirus pandemic.
Additional funding opportunities
Aside from small business grants, there are a lot of other ways for a new business to secure the startup funds it needs to grow. If you’re looking for other methods of financing your startup, here are a couple of options to look into:
Small business loans
Business loans are one of the most common ways that new entrepreneurs secure funding for their businesses. Unlike grants, loans do need to be repaid, so it’s important to understand how much money you need, what it will be spent on, and how you plan on making the money back.
Crowdfunding has become one of the most popular methods of raising money for startup businesses, largely due to online crowdfunding sites that make it accessible to nearly anyone.
Rather than seeking a large sum of money from an organization or angel investors, crowdfunding involves collecting small sums of money from ordinary people that believe in the potential of your own business.
Equity crowdfunding is similar, but a little different from ordinary crowdfunding. With equity crowdfunding, everyday people commit smaller sums of money to your business in exchange for equity.
Until recently, new businesses could only sell shares to accredited investors, meaning that there was strict net worth criteria that kept members of the public from being able to invest. The restriction also acted as a huge barrier to entrepreneurship, since newer merchants are less likely to have built a network of wealthy investors.
With equity crowdfunding, investment and entrepreneurship have become more accessible than ever.
Learn more: Equity Crowdfunding: Is It Right For You?
Capital investors refer to both angel investors and venture capital funds. Accredited investors can help provide funding for your business startup in return for equity ownership or convertible debt (a loan that may be converted into equity in the future).
The biggest benefit to capital investors is that they can provide you with large sums of money in a relatively short amount of time. At times, they can also provide valuable mentorship as you work to grow your own business.
- When to Pursue Capital: Key Financial Moments for Entrepreneurs and Growing Businesses
- Investing in Your Business: What You Need to Know Before You Get Started
- How to Start an Ecommerce Business: Build, Launch, and Grow a Profitable Online Store
Fuel growth in your startup with a small business grant
The first few months of running a business are often the most challenging. It takes time for a business to become profitable, but costs can add up quickly.
Small business grant programs can make a world of difference for a new business owner. Not only do they provide a vital injection of funds, but they can also help to establish connections in your industry and build buzz around your product.
If your business has the potential to innovate your industry and build new technologies to serve the public good, chances are you’re a great candidate for a small business grant.
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Small Business Grants FAQ
What are the requirements for getting a business grant?
Grant-issuing organizations tend to gravitate toward growing businesses that add value to a particular community, contribute to a public good, or help develop technologies in a specific industry.
There’s no single set of requirements for all business grants, but every grant-issuing organization has a specific goal in mind and must believe the expansion of your business helps to achieve this goal.
Can you get free money from the government to start a business?
Yes, there are a lot of small business grants issued by governments and federal agencies, though not every business will qualify. If you’re interested in learning more about government grants offered in your country, check out the links below:
What are the benefits of a grant to start a business?
There are a ton of benefits to getting a grant for your business. Not only do the funds directly cover the costs associated with expanding your business, but working closely with a grant-issuing organization can help build buzz around your business and develop connections to key players in your industry.