Best Business Grants

A business grant is a sum of money awarded to a small business by the state government, federal government, or a private organization. As the name suggests, you don’t have to pay back these grants. They also don’t come with interest or other fees. This essentially makes them a gift to be used for your business venture.

Along with being free, business grants come with a certain level of prestige. This is partially because they’re highly competitive. But it’s also because receiving one can bring attention to your business. This can not only improve your networking opportunities, but it could also lead to more funding or growth options in the future.

If you get a small business grant, you could use it to further your business in a lot of ways. For example, you could develop or expand your services or market. Or you could use the money to recover from a financial crisis your business has recently suffered.

Unlike loans or other types of financing, business grants often have strict requirements about how you can use the money. If you don’t use the funds correctly, you could end up losing the grant or have to pay it back.

Some business grants are industry-specific, meaning your organization must operate in that industry to qualify. Others are only available to certain minority groups. Certain grants are meant for businesses that meet certain revenue criteria.

Whatever type of business you have, it’s worth looking into the different types of grants to see if your company qualifies for one. It might take some time and effort, but the benefits of receiving a grant can far outweigh the potential challenges involved.

The application process for a business grant depends on the grant. Some have a simple online application that only takes a few minutes. Others — such as federal grants — may require you to write a grant proposal that can take several weeks to complete.

Although the process can vary, here’s what you’ll typically need to do:

1. Gather your documents. You’ll need certain documents and information, such as your personal and business details. This could include your business plan and pitch, typical annual revenue, business history, and the number of employees you have. You might also have to specify why you need the funds.
2. Research your grant options. See what types of business grants are available. They could be federal, state, or privately offered. For federal business grants, head to grants.gov and follow the steps to apply. Or go to the U.S. Small Business Administration (SBA) and search for grants there.
3. Look into private organizations. Private grants are harder to find than state or federal ones, but they’re out there. The Local Initiatives Support Corporation, for example, is a nonprofit that helps support community development initiatives nationwide. One way they do this is through small business grants.
4. Check if your business qualifies. Since grants have strict eligibility requirements, it’s important to review these before applying. That way, you won’t waste time applying for a grant you don’t qualify for. For example, your business might need to be in a certain industry or make a certain amount of revenue each year.
5. Narrow it down. Once you’ve done some research, narrow down your options. This will help you find the ones that best suit your needs.
6. Create a proposal. If required, create and submit a thorough proposal that outlines your project. The proposal should also explain why your company needs the grant. And it should include evidence that your venture is worth investing in.
7. Submit the small business grant application. Once you have your proposal and any required documents, complete the grant application. If approved, it can take anywhere from a month to a year and a half to receive the funds. This depends on the organization, though.

Many types of business grants exist, including:

• Federal business grants: These large grants primarily exist to help businesses innovate by funding their research and development. Head to the SBA website to see what’s available. Or check with the U.S. Department of Energy to see what opportunities they have.
• Regional or state business grants: The U.S. Economic Development Administration offers funding opportunities and programs at the state level.
• Corporate business grants: Some major corporations, such as Walmart and Visa, offer grants to help small businesses or nonprofits succeed. These grants tend to be small, however.
• Industry-specific or specialty business grants: This includes grants for startups and businesses that are veteran-, women-, or minority-owned. There are also grants available for businesses that have suffered an economic loss due to something beyond their control.

If you’re trying to choose the best business grant for you, here are some things to ask yourself:

• Do you meet the minimum requirements? Many grants have strict eligibility criteria. Your business may have to meet a minimum annual revenue amount or be in a specific industry, for example.
• How much do you need and why? Grants come in all sizes, ranging from a few thousand to hundreds of thousands of dollars. Think about what you need and why.
• Is a proposal required? Certain options — like federal grants — require a formal proposal as part of the application process. Make sure you know exactly what your business is about and be prepared to explain why you should get the grant.
• Are you prepared for the competition? Business grants are often highly competitive. The bigger or more prestigious the grant, the greater the competition.
• Are you prepared for the application process? Small business grant applications are often tedious and lengthy. It can also take months or even longer before you hear back about the funding decision. Be prepared to wait for a while after applying.

Here’s an overview of the major benefits and drawbacks of business grants.

Pros of Business Grants

These are the main advantages:

• Many organizations – state, federal, and community – offer business grants
• Can be used to help your business grow or stay afloat after an economic crisis
• Getting one comes with a certain level of prestige and can open your networking opportunities
• Using one to expand your business could also help the community
• You could get a grant for thousands or millions of dollars

Cons of Business Grants

And these are the main drawbacks:

• Highly competitive application process
• Your business may need to be in a specific industry or cater to a certain demographic to qualify for a grant
• May require you to write a persuasive grant proposal
• Grant funding isn’t always flexible, meaning you might have to use the money in specific ways

You may want to get a business grant if you:

• Meet or exceed the qualification requirements
• Want to avoid getting a small business loan
• Are ready to develop your business further but don’t have the funds

Alternatives to Business Grants

If you don’t qualify for a business grant, here are a few alternatives you may want to consider:

• SBA Loan: These loans range from $500 to $5.5 million, but they come with specific requirements. Eligibility is based on things like borrower credit score, business industry, and business location.

• Business Line of Credit: A business line of credit is similar to a personal line of credit or credit card. You can borrow up to a certain credit limit. You’ll also only pay interest on the borrowed amount. This is a flexible option that’s best for those who can manage their cash flow well.

Cash Advance Loan: With a cash advance loan, your lender will give you the money upfront to fund your venture. In exchange, you’re promising them a share of your company’s future profits. These are typically easier to get than grants.

If you choose to go with a business loan instead of a grant, here are some examples of what you could get:

*Loans and requirements are subject to change